Dow Gives Up 63 as Stock Rally Ends
Wall Street’s winning streak ended at two days, as stocks fell broadly but modestly Tuesday.
Meanwhile, an early rally in the bond market ran out of steam, and yields ended only slightly lower.
The Dow Jones industrials lost 63.33 points, or 0.8%, to 7,938.14 after rebounding nearly 270 points in the previous two sessions.
The 30-stock Dow was weighed down by Eastman Kodak, which plummeted $11.19 to $72.38 after reporting a worrisome decline in third-quarter sales.
Overall, while Tuesday’s batch of quarterly earnings reports showed more damage to the bottom line from the global economic crisis, many major companies were able to offset that damage with strong U.S. and European results.
Even so, First Call, which tracks earnings estimates, has forecast that third-quarter earnings for the blue-chip Standard & Poor’s 500 companies in total will be the worst in seven years.
Investors now are focusing on company comments on the outlook going into 1999 to see if business conditions may worsen.
“Which stories have good earnings [prospects] is what’s going to drive the market over the next month or so,” said Peter Gottlieb, portfolio manager at First Albany Asset Management.
On Tuesday, profit takers took control of the market from the outset. By the close, losers outnumbered winners by 18 to 13 on the New York Stock Exchange and by 24 to 14 on Nasdaq.
The technology-stock-heavy Nasdaq composite index fell 36.63 points, or 2.4%, to 1,509.45.
The bond market didn’t provide much support. The yield on the benchmark 30-year Treasury bond fell as low as 5.02% in the morning but closed at 5.09%, down from 5.11% on Friday. The bond market was closed Monday for the Columbus Day holiday.
Bonds ended weaker even though the dollar rose to 119.15 yen in New York from 117.63 on Monday. The dollar has been gaining this week after plunging against the yen last week.
Among Tuesday’s highlights:
* Tech stocks were down ahead of Intel’s earnings report, released after the market closed. The company beat expectations. Intel lost $1.88 to $83.56, Microsoft fell $3.31 to $96.44, IBM slid $2.69 to $128.19 and Dell fell $3.06 to $53.
PeopleSoft fell $4.25, or 18%, to $18.88 after the second-largest maker of business-management software canceled its appearance at an investment conference.
* Drug stocks were mixed amid disturbing news that Monsanto and American Home Products canceled their mega-merger. Eli Lilly fell $1.25 to $72.50 and Pfizer lost $5.50 to $87.50 on a disappointing earnings report, but Schering-Plough gained $1.69 to $97.38 and Warner Lambert rose $1.75 to $70.75.
Meanwhile, biotech stocks were sharply lower.
In foreign trading, markets were mixed, with Tokyo off 2.3% and Frankfurt up 1.2%.
In commodity trading, grain, soybean and pork prices soared after U.S. officials said they were in talks with Russia on the possibility of a food aid package for the financially strapped country.
Market Roundup, C9
