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Wall St. tires after record
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March 17, 1998: 3:22 p.m. ET
Stocks remain modestly lower, but bullish fundamentals still there
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NEW YORK (CNNfn) - U.S. stocks maintained modest losses in late trading Tuesday, taking a breather after Monday's daring record run as technology and oil sectors weighed on the market.
But despite the market's stumble, analysts said the right fundamentals are in place to give stocks a strong footing amid a friendly inflation outlook, brought on by sinking oil prices, and a slew of mega-merger news.
Among leading Wall Street gurus to change their minds about the market: Goldman Sachs' Abby Joseph Cohen, who raised her year-end projection for the Dow to 9,300, up from 8,700, a "conservative" estimate she made on Feb. 2.
"The principal conclusion is that we expect profit growth to continue through our new forecast horizon," Cohen said in a strategy report.
Shortly before 3 p.m. the Dow Jones industrial average fell 6.97 points to 8,711.88. On the New York Stock Exchange, declines held a lead over advances 1,591 to 1,309 on trading volume of 545 million shares.
In other markets, the technology-saturated Nasdaq Composite lost 12.65 to 1,775.53 and the broader S&P index was down 3.72 to 1,075.55.
Bonds turned lower as selling emerged late in the day. Earlier, the market had ignored a 6 percent surge in housing starts in February and focused on a strong dollar and falling oil prices -- a guard against rising inflation. The price of the benchmark 30-year Treasury bond fell 10/32 of a point, raising the yield to 5.87 percent.
The dollar settled in a narrow range, giving back some gains against the German mark and the Japanese yen. A festering economic and financial crisis in Japan continued to support the dollar against Asian currencies while news of an under-the-weather Russian President Boris Yeltsin gave the greenback strength against the mark.
Banks ride high with Chase
Despite the overall negative tone in the market, banking shares surged, helped by low interest rates and news of a major restructuring at Chase Manhattan (CMB), the nation's largest bank. Chase shares surged 4-5/8 to 132-15/15 after the bank said it would cut 4,500 jobs, or 6.5 percent of its work force, and take a first-quarter charge of $320 million. The reorganization should result in annual savings of $460 million for Chase.
Other banking shares followed higher, with Citicorp (CCI) rising 1-1/8 to 140-11/16 and Dow member J.P. Morgan (JPM) gaining 2-9/16 to 132-11/16. Both recently announced job cuts in an effort to improve their bottom lines.
Mergers make market's day
Several large mergers joined low inflation and quarter-end buying by mutual funds to give the market support, a day after Wall Street's spectacular record run.
Among newsmakers of the day, shares of H. F. Ahmanson (AHM) surged 13-11/16, or almost 21 percent, to 79-3/16 on news Washington Mutual (WAMU) is buying the company in a deal worth $9.9 billion. Ahmanson is the parent of Home Savings of America, the nation's second-largest savings institution after Washington Mutual. Their marriage will create a new West-Coast powerhouse with assets of over $150 billion. Shares of Washington Mutual rose 1-3/8 to 73-1/8.
In another deal, shares of Inland Steel Industries (IAD) jumped 4-5/8, or more than 19 percent, to 28 on news Ispat International (IST), a rival Dutch conglomerate, is buying the company's manufacturing unit for $1.43 billion in cash and debt. Ispat's American depositary receipts rose 1-3/16 to 25-15/16.
And shares of Bergen Brunswig (BBC) rose 3/16 to 42-1/2 after the company said it would fight the Federal Trade Commission's attempts to halt its proposed $2.8 billion merger with Cardinal Health (CAH). Shares of Cardinal Health slipped 5/16 to 85-5/8.
Tech stocks left out in the cold
But technology shares, left behind in Monday's rally, stumbled again Tuesday, hurt by a larger-than-expected loss at computer chip maker Micron Technology (MU), whose stock lost 2-9/16 to 31-3/16. Late Monday Micron said it lost 23 cents per diluted share in its fiscal second quarter, much more than the 17 cents Wall Street gurus had predicted.
Rival chip maker Intel (INTC), which itself issued a profit warning several weeks ago, fell 1-1/16 to 76-5/8.
And shares of software giant Microsoft (MSFT) slipped 1-15/16 to 80-1/16 after the Justice Department widened its ongoing probe into the company's business practices to include applications related to Sun Microsystems' (SUNW) Java programming language.
Other technology stocks also weakened, with Dell (DELL) losing 1-11/16 to 61-7/8, Compaq (CPQ) falling 1-7/8 to 23-5/8, and Dow component IBM (IBM) off 3/4 to 100-1/2.
Oil stocks get drained
Persistent weakness in world oil prices kept shares of oil companies depressed, with Dow component Chevron (CHV) losing 1-11/16 to 81-3/16 and another Dow member, Exxon (XON), shedding 1-7/8 to 62-5/16.
In the day's other news, shares of Immunex (IMNX) rose 3-5/8 to 74-1/2 after a company official expressed optimism that Immunex will be able to obtain "fast track" consideration from the Federal Drug Administration of its rheumatoid arthritis drug Enbrel. The company believes it could receive approval for the drug by year-end.
--by staff writer Malina Poshtova Zang
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