|
Dow gets the Big Blues
|
 |
January 22, 1999: 10:26 a.m. ET
Blue chips erode after IBM's earnings disappoint, Brazil adds to worries
|
NEW YORK (CNNfn) - U.S. stocks fell sharply early Friday, hurt by growing concerns over Brazil's economic woes and seemingly disappointing earnings reports from a series of technology leaders, especially IBM.
Shortly after 10 a.m. ET the Dow Jones industrial average was down 110.71 points, or 1.2 percent, at 9,153.37. On the New York Stock Exchange, declines trounced advances 1,718 to 633 on trading volume of 120 million shares.
The Nasdaq Composite lost 15.47 points to 2,329.25 and the S&P 500 index dropped 9.68 to 1,225.48.
Wall Street's losses came on the back of earlier slides in markets in Asia and Europe as the Brazilian currency, the real, continued to slide, triggering an ineffective intervention by the country's central bank.
The real's pains triggered Argentina, South America's second-largest economy and Brazil's biggest trading partner, to consider plans to abandon its own currency, adopting the U.S. dollar instead.
Meanwhile, new rumors sprang up that China might be considering a devaluation of its own, a move that would rattle already beaten down Asian economies further.
The bond market climbed, amid a broad wave of safety-seeking buying from investors spooked by the Brazilian currency shakeup and the downward spiral in stocks around the globe. The benchmark 30-year Treasury bond rose 17/32 of a point in price for a yield of 5.10 percent.
The dollar rose against the Japanese yen and the euro amid fears that Brazil's inability to save its currency from a meltdown could trigger a round of competitive devaluations that would affect emerging markets as far as China.
High techs turn into low flyers
Much of the weakness on Wall Street was caused by heavy selling among technology shares, the market's hottest niche, where recent sharp advances have caused many experts to question the rationality behind some of the high-tech stock valuations.
A series of earnings reports, the latest one from the world's number one computer maker IBM, made such doubts turn to near panic and sent investors running for the exits.
IBM (IBM) shares plunged 12-3/16 to 184-13/16 following what investors deemed was a disappointing earnings report released late Thursday. Although Big Blue beat market forecasts with its per-share results for the fourth quarter, the company's revenue growth apparently failed to meet the Street's high expectations.
Following IBM's earnings release, Morgan Stanley Dean Witter downgraded the stock to "outperform" from "strong buy," yet raised its target price for the company to $210 a share.
Another high-profile tech firm, Sun Microsystems (SUNW), which also reported better-than-expected earnings for its fiscal second quarter, saw its stock gain 1-1/2 to 99-3/4 after sliding 7-1/8 Thursday. Sun also announced a 2-for-1 stock split.
Other technology leaders were mixed, with Microsoft (MSFT), whose latest earnings were did get investors' approval, inching up 3/16 to 158-1/2, Cicso Systems (CSCO) down 1-1/16 to 100-1/4, Intel (INTC) off 2-1/4 to 131-1/4 and Dell Computer (DELL) trading down 3/8 to 83-13/16.
Among the few solid gainers, Gateway Computer (GTW), which late Thursday said a 35 percent growth in computer sales contributed to better-than-expected fourth-quarter results, saw its stock rise 1-1/4 to 59-1/4.
Elsewhere in the market, investors dumped financial shares amid fear that exposure to volatile emerging markets could hurt those companies' performance.
Among the Dow components, American Express (AXP) lost 2 to 100-1/2, Citigroup (C) shed 5/8 to 51-13/16 and J.P. Morgan (JPM) was down 1-3/8 to 104-1/2.
In other news, shares of DaimlerChrysler (DCX) fell 2 to 103-5/8 after rumors that a deal between the auto giant and Japan's Nissan Motor (NSANY) was imminent proved untrue. 
-- by staff writer Malina Poshtova Zang
|
|
|
|
|
 |
|
