|
Dow takes it on the chin
|
 |
December 10, 1998: 5:24 p.m. ET
Earnings warning from Merck sinks in; investors seek cover after recent gains
|
NEW YORK (CNNfn) - Blue chip stocks took a drubbing Thursday, after concern about another spate of earnings troubles led investors to question whether the stock market's recent run was overblown.
The Dow Jones industrial average dropped 167.61 points, or 1.9 percent, to 8,841.58, its lowest close since Nov.12. On the New York Stock Exchange, declines led advances 2,124 to 914, with 752 million shares trading hands.
Getting caught in the downdraft after hitting new record highs Wednesday, the Nasdaq Composite fell 34.46 to 2,015.96, or 1.7 percent. The S&P 500 index fell 18.47 to 1,165.02.
Peter Canelo, investment strategist at Morgan Stanley Dean Witter, said the dip on Wall Street Thursday is just a natural pullback from gains in recent months. (218K WAV) or (218K AIFF)
Drug companies, computer-chip makers and banks large and small were mostly lower while major phone companies -- including the widely held regional Bells -- were generally on the rise.
Airlines and shipping companies were also lower, despite a continued drop in the price of crude oil. The Dow transports index dropped 51.25, or 1.7 percent, to 3,012.55.
That anti-inflationary fall in oil prices, coupled with the lackluster performance among stocks powered the bond. The 30-year issue was up 11/32 for a yield of 4.96 percent.
The dollar fell against the German mark and Japanese yen. The greenback slipped after the Bank of England lowered interest rates by a half-point Thursday.
Corporate warnings, layoffs weigh
The latest in the week's string of corporate alerts sent a chill across Wall Street Thursday, after similar such predictions from J.P. Morgan (JPM) and Procter & Gamble (PG) earlier in the week.
This time, Dow member Merck (MRK) was behind the plunge, losing 5-11/16 to 146-1/4 after the drug company's top executive warned late on Wednesday earnings will fall short of Wall Street targets next year.
Deutsche Bank and Warburg Dillon Read each downgraded Merck, but Gruntal raised its rating on the drug maker.
Elsewhere, Warner Lambert (WLA) lost 1-3/4 to 75-9/16, Bristol-Myers Squibb (BMY), hit with a downgrade, dropped 4-5/8 to 123, and American Home Products (AHP) fell 1-15/16 to 52-3/16.
Also lower was Dow member Coca-Cola (KO), falling 1-1/16 to 66-1/16 after Morgan Stanley Dean Witter floated concerns whether the beverage giant would meet fourth-quarter earnings goals.
Corporate downsizing was again the buzz ringing through the telecommunications sector. MCI Worldcom (WCOM) finished up 3/32 to 62-3/4, but off earlier highs, following reports the telecom giant will announce plans to slash billions of dollars in costs and cut as many as 3,750 jobs.
A WorldCom spokesman declined to comment about the job cuts.
And the Swedish mobile-phone maker L.M. Ericsson Telephone (ERICY) sank 4-3/4 to 24-1/8, or about 16 percent, after saying it will lower its expectations for 1998 and 1999 and plans to cut up to 10,000 jobs.
Several bellwether technology issues ended lower: Microsoft (MSFT) lost 2-1/16 to131-9/16, Dell Computer (DELL) slipped 13/16 to 67-5/16, Dow member IBM (IBM) dipped 4-7/16 to 165 and Intel (INTC) dropped 4-9/16 to 114-5/8.
Lurking in the shadows was more buyout activity. Aetna (AET) agreed to buy Prudential HealthCare, a unit of Prudential Insurance, for $1 billion. Aetna shed 1-5/8 to 79-3/16.
On the initial public offering front, radio company Infinity Broadcasting (INF), a division of CBS (CBS), launched its offering of 140 million shares, after pricing Wednesday at $20.50 a share. Infinity shares rose to 23-1/8.
Two of the latest Internet-related IPOs got an upbeat response, but were muted compared to a spate of earth-shattering offerings in the sector recently.
The provider of Internet connection services AboveNet (ABOV) rose to 16-3/4, or nearly 29 percent, after pricing late on Wednesday at $13 per share.
And Internet America (GEEK) climbed to 14-7/8, or about 14 percent, after the Internet service provider priced Thursday morning at $13 per share. 
(Click here for a look at the day's CNNfn market movers)
(Click here for a look at the day's CNNfn tech stock report)
-- by staff writer Jamey Keaten
|
|
|
|
|
 |
|
