Net, Consumer Stocks Lead Broad Sell-Off
Internet and consumer-products stocks were among the major sectors leading Monday’s sweeping market decline.
The sell-off in the Dow Jones industrial average was broad-based, with 27 of 30 Dow component stocks finishing lower. General Electric fell $6 to $138.13, Johnson & Johnson slumped $6.19 to $83.69 and Coca-Cola slid $2 to $64.88.
Procter & Gamble sagged $6.69 to $96 despite calling off talks to acquire drug makers Warner-Lambert and American Home Products, a potential deal that had analysts frowning.
Along with the major indexes, the Russell 2,000 index of smaller companies fell for the first time since Jan. 12, losing 2.1%.
Some investors ran for cover in the Treasury market, sending the yield on the benchmark 30-year bond to 6.65% from 6.70% Friday.
The breadth and the depth of the stock sell-off, with the Dow off 2.2% and the Nasdaq composite down 3.3%, suggested that factors beyond fears of interest rate hikes weighed on the market. Federal Reserve policy makers meet next week, and are widely expected to raise short-term rates again.
Some analysts suggested many investors are largely unimpressed with corporate earnings reports. Others said the market’s extreme volatility lately may finally be shaking investors out.
Technically, some recent stock leaders suddenly look sickly. GE, Wal-Mart Stores and Home Depot, to name just three Dow stalwarts, all broke below their 50-day moving average prices Monday, a technical warning sign.
To be sure, some investors were probably just taking profits from a solid rise in Nasdaq last week. Cisco Systems fell $6.19 to $109.06, Apple lost $5.06 to $106.25 and Sun Microsystems dropped $5.31 to $79.13.
But Dell Computer fell $2.19 to $41.56 after Robertson Stephens said the computer maker may have a revenue shortfall of $200 million to $300 million in its fourth quarter.
Several of 1999’s biggest gainers were among the hard hit. Qualcomm fell $14.88 to $140.06 after the wireless giant said it will take a fiscal second-quarter charge for firing hundreds of workers. Last year’s hottest major stock is down 21% so far in 2000.
In the Internet sector, Juniper Networks slid $8.56 to $141.38, Yahoo plunged $27.63 to $324.31, EBay dropped $14.13 to $136.38 and Network Solutions lost $34.94 to $236.69.
But Amazon.com jumped $8.06 to $70.13 after the unprofitable online retailer said it will receive $105 million from Drugstore.com over three years for featuring the drug retailer on its Web site.
Outside the tech sector, Southwest Gas skidded $2.13 to $20.19 after Oneok canceled its plan to purchase the distributor of natural gas for $1.8 billion. Oneok was unchanged at $27.56.
St. Jude Medical fell $2.94 to $25.88 as the maker of mechanical heart valves said it is recalling products with Silzone coating and will take a $16-million to $20-million charge.
WMS Industries fell $4.38 to $11.63 as the maker of pinball games was downgraded to “hold” from “strong buy” by Prudential Securities after WMS’ fourth-quarter earnings report.
Despite the broad tumble, there were bright spots. Among the day’s winners:
* Eastman Kodak rose $1.31 to $62.06 after reporting it earned $1.27 per share in the fourth quarter, beating analysts’ estimates. Kodak, which has faltered in recent years because of tougher competition from Fuji, also issued a strong outlook for 2000.
And Lexmark International Group soared $12 to $92.50 after the maker of inkjet and laser printers reported fourth-quarter profit that also beat expectations.
* Compaq Computer climbed $1.75 to $33 after a Donaldson, Lufkin & Jenrette analyst raised his recommendation on the personal-computer manufacturer to “buy” from “market perform.” After slumping in 1999, Compaq has bounced back 22% this year.
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Market Roundup, C14
