Dow Eases After Run at 10,000; Nasdaq Slumps
Maybe next week.
The Dow Jones industrial average made another run for 10,000 on Friday but fell short. The index got as high as 9,958 but ended 21.09 points lower at 9,876.35.
The Dow was hurt by an earnings warning from machinery maker Caterpillar and by a slump in IBM after another major tech firm--Oracle--posted quarterly sales gains below expectations.
“Caterpillar and Oracle brought back a dose of reality to the market,” said Alan Skrainka, strategist at brokerage Edward Jones.
The broad market also was lower. Losers outnumbered winners by 16 to 14 on the Big Board. The Standard & Poor’s 500 index eased 3.09 points to 1,294.59.
“It’s the same thing as [Thursday]--everyone got all freaked out and nobody wants to buy at the top of the ticket,” said Mara Glassel, analyst at Prudential Securities’ Equity Focus Group, referring to the Dow’s attempts to hit 10,000.
It didn’t help that the perennial worry about corporate earnings growth came to the fore again, as Caterpillar said its first-quarter earnings will fall below Wall Street’s expectations. It cited economic conditions in Latin America.
The stock, a Dow member, plunged $6.19 to $44.69.
Oracle’s tumble--it lost $8.31 to $28.56 on huge volume of 100 million shares--helped drag the Nasdaq composite index down 30.72 points, or 1.3%, to 2,381.53, though the index recovered from a loss of 50 points.
Sales of Oracle’s business application software rose 5.5% in the quarter, while analysts expected 20% or more. Oracle said companies delayed purchases to focus on the year 2000 computer bug. Total revenue also fell short of estimates.
Oracle’s stumble added more gloom to the tech sector, where in recent weeks major stocks have been hammered on fears of slowing computer sales.
In other markets Friday, bond traders were surprisingly unruffled as oil prices rose again, reflecting news that major exporters plan production cutbacks. Instead of worrying about oil, bond traders focused on the February wholesale prices report, which showed inflation remains tame.
The yield on the 30-year Treasury bond ended at 5.53%, down from 5.56% on Thursday and 5.60% a week ago.
On Wall Street the Dow’s gain for the week came to 1.4%, while the Nasdaq index rose 1.9% despite Friday’s tumble.
Among Friday’s highlights:
* Tech stocks sliding with Oracle included IBM, down $4.88 to $178; Sun Microsystems, down $5.19 to $103.69; and Micron Technology, down $3.63 to $50.38.
* Drug store chain Rite Aid collapsed $14.44 to $22.56 after warning that fourth-quarter earnings will fall well below expectations because of new-store opening costs. Other stocks falling on earnings warnings included Day Runner, down $2.06 to $11.19, and Safeskin, down $6.28 to $8.97.
* On the plus side, airlines showed new strength, with Delta up $3.50 to $64 and US Airways up $2.63 to $52.50.
* Walt Disney climbed $1.38 to $36.06, as an analyst at BT Alex. Brown upgraded it to “buy” from “market perform,” citing a bullish outlook for the TV network market and positive buzz surrounding the company’s summer Tarzan film.
Market Roundup, C4
