Market Rally Turns South on Intel Worries; Dow Loses 33
An early rally on Wall Street faded late in Tuesday’s session on concerns about Intel’s first-quarter earnings.
Stocks seemed to ignore a drop in bond yields and another rally in Japanese stocks.
On Wall Street, the Nasdaq composite index rose as much as 36 points but ended with a loss of 4.68 points at 2,392.94.
The Dow Jones industrials slipped 33.85 points to 9,693.76, the second straight loss after the blue-chip index rocketed 268 points to a record 9,736.08 last Friday.
Most broader indexes also were off marginally, as losers outnumbered winners by a margin of 17 to 14 on the New York Stock Exchange and by 22 to 17 on Nasdaq.
Rumors that computer chip giant Intel will soon warn that first-quarter earnings will fall short of estimates caused technology stocks “to just kind of give up” late in the session, said Edward Collins, trader at Daiwa Securities America.
Intel, whose shares slid $4.31 to $115.31, said its practice is not to comment on market rumors.
Major tech stocks have been under pressure in recent weeks as analysts have focused on slowing sales growth at Dell Computer, Compaq and others. Late Monday, Intel rival Advanced Micro Devices warned of a first-quarter loss because of production problems.
AMD’s shares sank $1.44 to $17.50 on Tuesday.
The stock market failed to draw any strength from another decline in bond yields. Bonds were cheered by the government’s revised report showing that the productivity of American workers surged at a 4.6% annual rate during the final three months of last year, the best showing in six years.
The yield on the benchmark 30-year Treasury bond fell to 5.53% from 5.59% on Monday. The yield hit a seven-month high of 5.7% last week.
Shorter-term bond yields also declined.
Good news out of Japan didn’t light Wall Street’s fire. Sony Corp.’s announcement of a major restructuring effort helped drive the Nikkei-225 stock index up 2.2% to 15,096 on Tuesday, the highest close since last November.
Traders said the Japanese market remains strongly supported by continued foreign buying, as some investors bet on a turnaround for the depressed economy.
Mexico’s main market index also continued to advance, rising 2.4% to 4,568.10. Morgan Stanley Dean Witter & Co. raised its 1999 growth forecast for the Mexican economy to 3.6% from 3.1% as a booming U.S. economy lifts demand for Mexican-made goods.
Among U.S. market highlights:
* Tech shares following Intel lower included Compaq, down $1.63 to $32.75; Hewlett-Packard, down $2.19 to $67.69; Applied Materials, down $4.38 to $58.88; and Texas Instruments, off $5.94 at $99.06.
But IBM rose $3.31 to $182.19 and Microsoft added $2.81 to $161.81.
* Many Internet names continued to streak, with Inktomi up $2.88 to $73.88, Amazon.com up $7.75 to $129.94 and Go2Net up $18.13 to $84.88.
* Tobacco stocks rose on RJR Nabisco’s breakup plans. RJR added 13 cents to $28.75, Philip Morris gained 56 cents to $39.94 and Loews rose $1.50 to $81.56.
* The Dow was held back by AT&T;, off $2.44 to $85.56; and Disney, down $1.75 to $34.69.
Analyst Richard Simon at Goldman, Sachs & Co. lowered his earnings estimates for Disney, citing lower-than-expected revenue from producing TV shows and movies. Simon now predicts operating earnings of 81 cents a share for the year, down from 85 cents previously estimated.
* Bank and brokerage stocks rallied as interest rates fell. BankAmerica rose $2.13 to $70.25, Bank One added $1.13 to $56.31 and Bear Stearns jumped $2.19 to $46.44.
But utility stocks, which usually rise when rates fall, were mostly lower. Duke Energy lost $2 to $56.56.
* U.S.-traded shares of Japanese companies shot higher, including Sony, up $8.19 to $94; Matsushita, up $7.38 to $175; and Hitachi, up $3.19 to $66.56.
Market Roundup, C7
