Dow Closes Off 58 Points as Jitters Continue
Blue-chip-stock and bond prices fell Thursday as investors continued to worry about upcoming corporate earnings figures and awaited two key economic reports due today.
The dollar was mixed, but coffee prices jumped on concerns about tight supplies in coming weeks and the hint of crop-threatening heat in Brazil, the world’s biggest producer.
The Dow Jones industrial average, down as much as 138 points in afternoon trading, managed to regain most of that, closing off 58.30 points at 7,660.98. Still, the blue-chip index has racked up a two-day loss of more than 2% and stands 7.2% below its record high of 8,259.31, set Aug. 6.
The Standard & Poor’s 500-stock index fell 6.44 points to 912.59.
In the broader market, declining issues beat advancers 1,759 to 1,076 in heavy trading on the New York Stock Exchange.
The technology-heavy Nasdaq composite index edged up 0.61 point to 1,639.86.
“As you near the end of the quarter, you get a lot of nervousness about upcoming earnings and with several very big companies’ warnings of disappointing earnings, the market takes some hits,” said James Crawford, senior vice president of Trevor Stewart Burton & Jacobsen Inc.
Technology stocks were hit hard early in the session by news that several leading brokerages had lowered their earnings forecasts for Ascend Communications, a leading player in the computer-networking sector.
Corning, meanwhile, issued a lower forecast for its third-quarter profit, blaming disappointing growth in its optical fiber and cable businesses.
However, the most unsettling news came after the close of trading, when Motorola warned that its third-quarter results will be significantly below expectations, setting the stage for a rocky start to today’s trading. Motorola blamed weakness in two big pager markets and its decision to stop making Macintosh clones. A similarly dire warning from Motorola in July 1996 helped prompt a steep market sell-off that summer.
The announcement sent Motorola stock tumbling in after-hours trading to $68.625 from $74.75. Corning, the most actively traded NYSE issue, fell $5.38 to $42. Ascend, the most actively traded Nasdaq issue, fell $2.19 to $37.81.
The NYSE composite index fell 3.57 points to 477.06.
The Russell 2,000 index of smaller companies, which fell on Wednesday for the first time in 13 sessions, slipped an additional 0.97 point to 435.93. That index had seen record high closes for nine straight sessions before Wednesday.
The Labor Department reported Thursday morning that the number of first-time claims for jobless benefits fell by a surprising 14,000 last week to 310,000. Analysts had expected a 1,000-claim dip. The report intensified the jitters that have been building in advance of today’s readings on August’s wholesale price levels and retail sales.
Although recent readings of inflation have indicated tameness, economists contend that a strong job market will eventually force employers to pay more higher wages and then raise prices to compensate--particularly if signs of brisk consumer demand continue.
The yield on the benchmark 30-year Treasury bond fell to 6.69% from 6.65%. . The dollar rose to 119.55 yen in late New York trading from 119.31 late Wednesday.
At the Coffee Sugar and Cocoa Exchange, coffee for September delivery rose 8.50 cents to 207.50 cents a pound.
Overseas, Tokyo’s Nikkei-225 stock average fell 2.3%, Frankfurt’s DAX index fell 1.9% and London’s FTSE-100 fell 1%.
Market Roundup, D6