Tech Stocks Are Hammered After Warning
Technology stocks plunged Wednesday after Computer Associates became the latest company to warn that profit won’t meet expectations, and Salomon Smith Barney said the chip industry’s good times could be coming to an end.
The Nasdaq composite index sank 128.83 points, or 3.2%, to 3,863.10. Other major indexes were hit less, with the Dow industrials falling 77.07 points, or 0.7%, to 10,483.60 and the Standard & Poor’s 500 off 23.31 points, or 1.6%, to 1,446.23.
Computer Associates fell $21.69 to $29.44 after its warning late Tuesday. With “confession season” in full swing Wednesday, other firms punished for issuing warnings included BMC Software, off $14.19 to $21.31; Centura Banks, down $3.44 to $32.50; and Datastream Systems, off $2.75 to $8.75.
But earnings tracker First Call/Thomson Financial said second-quarter pre-announcements are running about par, with 57% negative. And S&P; 500 earnings are still expected to grow an average of 19.2% from the year-earlier quarter.
Advancing issues slightly outnumbered decliners. Volume tallied 1.3 billion shares on Nasdaq and slightly more than 1 billion on the New York Stock Exchange.
In the Treasury market, yields fell slightly.
Among other equity highlights
* Tech blue chips were not immune. IBM eased $4.50 to $105 and Oracle lost $7.88 to $72.31 after J.P. Morgan downgraded it, citing concerns over management succession plans.
* Oil stocks were also lower in the first trading session after Saudi Arabia signaled it may soon boost production. Exxon Mobil fell $2.61 to $76.94, Baker Hughes dipped $2.44 to $30.47 and BP Amoco’s U.S. shares slid $4.44 to $53.88 after a Merrill Lynch downgrade.
But a decline in crude prices boosted shares of airline stocks such as AMR, up $2.25 to $28.38, and Delta, up $2 to $53.38.
* Some consumer, financial and drug stocks also bucked the downtrend, including 3M, up $4.44 to $88.50; Merrill Lynch, up $2.50 to $118; Eli Lilly, up $5.75 to $104.50; and Amgen, up $5.31 to $73.81.
Qwest Communications jumped $6.13 to $57.88 after joining the S&P; 500.
*
Market Roundup, C7-8
