Dow Off 45 Amid Jitters; Wall Street Braces for Dive
Stocks suffered modest profit-taking Wednesday, halting a record-setting streak, as investors grappled with renewed worries about corporate earnings--a concern sure to be heightened by a late-afternoon warning from Intel.
The Dow Jones industrial average fell 45.59 points to 8,539.24, ending a five-session string of record highs that had added 215 points to the blue-chip barometer.
Most broad-market indicators also posted moderate losses, although the Nasdaq composite managed a small gain, adding 2.56 points to 1,759.70.
But the tech-heavy Nasdaq market today is likely to come under heavy pressure from Intel’s report that its sales and earnings will be below expectations this quarter. (Story, D1)
Intel shares plunged 12% in after-hours trading late Wednesday, to $76.
The warning also sent Standard & Poor’s 500 index futures tumbling, a sign the broad market may open sharply lower today.
Analysts said that while Intel’s report was a surprise, the market has been tempting fate, hitting record levels even amid widespread expectations that corporate profit growth will slow in 1998.
“You’re going to see a continued deceleration in earnings” of U.S. companies, said Bill O’Connor, manager of the Marshall Large-Cap Growth & Income Fund. “That’s going to be a challenge for the market.”
The Dow was clipped Wednesday by Walt Disney shares, which fell $3.13 to $106.88 as several analysts downgraded the stock on concerns that current-quarter earnings will be disappointing, in part because of some weak films.
Overall, losers outnumbered winners by 17 to 12 on the New York Stock Exchange, in active trading.
Stocks didn’t draw much support from a rally in the bond market. After surging on Monday and Tuesday in the wake of stronger-than-expected economic reports, long-term yields fell back on Wednesday. The key 30-year Treasury bond yield dipped to 6.02% from 6.07% Tuesday.
Among Wednesday’s highlights:
* Many tech stocks gained before Intel’s report, with Apple Computer up $1.31 to $24.44, Dell Computer up $7.75 to $138.88 and Texas Instruments up $1.94 to $55.
* Drug stocks faltered. American Home Products fell $2.81 to $91.75, dragging down others, after safety concerns caused it to withdraw its application for federal approval of its new hypertension drug. Merck fell $1.94 to $124.88 and Johnson & Johnson dropped $1.19 to $73.31.
* Retailers were strong. Kmart surged $1.25 to $14.69 after reporting surprisingly good quarterly earnings. Other retailers gaining included Federated Department Stores, up $2.38 to $50.25, and Pier One, up $1.50 to $27.88.
* Auto stocks were mixed after February sales reports. GM surged $2.44 to $73 despite a sales decline, while Ford lost 75 cents to $58.19 on a small sales gain.
Market Roundup, D8
