Banking, Energy Lead Dow Decline
Stocks fell Tuesday, led by banking and energy shares, as investors remained fixated on company profit worries and found little solace in another record-setting drop by a key interest rate.
The Dow Jones industrial average closed with a loss of 72.74 at 7,906.25 after sliding to a deficit of nearly 100 points late in the heavily traded session.
Broad-market indicators also posted losses amid the nagging uncertainties over whether the barrage of fourth-quarter profit reports beginning next week will reveal any major damage from the economic crisis in Asia.
Analysts hesitated to read much significance into such a modest decline following substantial gains over the previous week and a half.
The profit concerns were most evident in the financial sector, which fell sharply following reports that Merrill Lynch had downgraded Citicorp and trimmed its profit forecasts for Chase Manhattan, BankAmerica and BankBoston.
Citicorp plunged $7.38 to $123 on the New York Stock Exchange, while Chase Manhattan slid $5.25 to $107.19 and BankAmerica fell $3.44 to $69.13. J.P. Morgan fell $5.06 to $110.92.
Energy stocks slid for a second day amid concerns that mild weather and sagging fuel prices have hurt the group. Analysts for Goldman Sachs and ABN AMRO both lowered their expectations for oil prices and earnings at major oil companies in 1998.
Exxon Corp. fell $2.19 to $59 and Chevron Corp. closed down $1.94 to $73.75.
Oil prices inched up 2 cents to $16.91 a barrel in New York trading following Monday’s slide to 30-month lows on concern over the resumption of U.N.-monitored Iraqi crude oil supplies, slowing Asian demand and a mild winter in key consuming countries.
Bond prices slipped Tuesday morning amid some profit-taking from Monday’s rally, but turned higher in the afternoon, pushing the yield on the 30-year Treasury down to 5.71%.
The Standard & Poor’s 500 stock list fell 10.49 points to 966.58, and the NYSE composite index fell 5.44 points to 507.33.
The Nasdaq composite index fell 13.98 points to 1,580.14, and the American Stock Exchange composite index fell 5.10 points to 675.03. The Russell 2,000 index of smaller companies fell 3.96 points to 433.10.
Among market highlights:
* Federal Express rallied $2.63 to $63.75 after it announced plans to increase rates on shipments within the U.S.
* Apple Computer jumped $3.06 to $18.94 after saying it expects to report a profit for its most recent quarter, a quicker return to profitability than analysts had expected.
* Handy & Harman fell $1.44 to $31.15 after WHX Corp. said there isn’t any new information that would warrant increasing its $30-a-share unsolicited offer for the maker of precious metals and auto parts.
The dollar eased to 133.65 yen in New York, down from 133.78 Monday, which was its highest level since April 24, 1992.
In foreign stock trading, most Asian markets closed sharply lower again as most currencies in the region continued to slide. Hong Kong’s main share index lost 1.6% and Singapore’s sank 3.8%.
Sellers also hit Latin American markets, sending the main Mexican stock index down 3.2% to 5,033.40 and Brazil’s down 4%.
