Dow Drops on Coke Forecast; Bond Yields Rise
U.S. stocks were mixed as Coca-Cola joined the list of Dow Jones industrial average companies warning that profits won’t meet forecasts, while computer shares gained.
“Earnings growth expectations have just been too high,” said Robert Natale of Bear Stearns Asset Management.
The Dow fell 19.82 points, or 0.2%, to 8,821.76, paring a 111-point loss. Coke was the biggest decliner in the average, which dropped for a fourth straight day.
The Standard & Poor’s 500 index was little changed at 1,166.46, up 1.44 points. The Nasdaq composite index gained 13.35 points, or 0.7%, to 2,029.31. Twice as many stocks fell as rose on the New York Stock Exchange.
Coke, the world’s largest soda company, forecast earnings of 24 to 25 cents a share for the latest quarter, less than the average estimate of 30 cents among analysts surveyed by First Call.
In an effort to boost its global profit, Coke snapped up rival Cadbury Schweppes’ brands outside the United States for $1.85 billion Friday.
U.S. bond prices posted their biggest loss in more than a month. The benchmark 30-year bond yield rose to 5.02%, from 4.95% on Thursday.
The dollar fell against major currencies amid concern that impeachment proceedings against President Clinton could sour foreign investors on U.S. financial assets. The dollar fell to 116.42 Japanese yen in New York from 117.33 on Thursday.
For the week, the Dow industrials lost 2.2%, the S&P; 500 fell 0.9%, and Nasdaq rose 1.3%. The Russell 2,000 index of smaller stocks fell 0.8%.
Among Friday’s highlights:
* Coke sank $3.19 to $62.88 after it said fourth-quarter earnings will be disappointing. The beverage maker is the seventh member of the Dow average this month to warn investors that earnings won’t meet forecasts, joining J.P. Morgan, Merck, Procter & Gamble, Union Carbide, Boeing and Sears, Roebuck.
* The Nasdaq got a big boost from Oracle, which rose $2.31 to $37.25. The database software maker surprised analysts by beating Wall Street estimates in its earnings report released late Thursday.
* Newell, the sixth-largest U.S. consumer and household products maker, fell $3.13 to $38.25 after it warned that weak holiday sales will push fourth-quarter profit below estimates.
* Eli Lilly rose $3.13 to $89.94 after the company released a study showing that its osteoporosis drug Evista helps reduce the risk of breast cancer, a finding that could help bolster lackluster sales.
* Capstead Mortgage rose $1 to $4 after saying it is selling its mortgage banking operations to two affiliates of GMAC Mortgage Group Inc., a unit of General Motors Acceptance, for $550 million.
* Telxon fell $12.25 to $15 after the maker of wireless and mobile information systems said it plans to restate downward its second-quarter financial results, and warned that its bottom line will fall short of analysts’ estimates for the rest of fiscal 1999.
* RF Micro Devices rose $9.88 to $46 after the maker of circuits for wireless communications said it expects to beat earnings estimates for its third quarter ending Dec. 31.
* Impath fell $15 to $24 after the company’s profit warning late Thursday damped sentiment for the medical diagnostics concern.
Global stock markets lost ground. In Tokyo, the Nikkei slid 2.7%; in London, the FTSE-100 lost 2.1%; in Frankfurt, the DAX declined 2.3%.
Market Roundup, C4
