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Markets & Stocks
Severe losses on Wall St.
February 9, 1999: 11:42 a.m. ET

Stocks retreat as valuation concerns loom, analysts talk correction
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NEW YORK (CNNfn) - Concerns about high valuations in the stock market and renewed selling among technology issues drove U.S. stocks sharply lower at midday Tuesday.
     The Nasdaq Composite took the biggest hit, shedding 53.59, or 2.2 percent, to 2,351.33 shortly before 11:30 a.m. ET
     The Dow Jones industrial average was 84.19 points lower at 9,206.92. On the New York Stock Exchange, market breadth was heavily negative with declines leading advances 1,705 to 939 as 260 million shares changed hands.
     The S&P 500 index fell 16.41, or 1.3 percent, to 1,227.36. (Click here for a look at today's CNNfn market movers)
     Words of caution uttered by three of Wall Street's most respected market watchers Monday continued to cast their shadow over the stock market a day later. All three, Prudential Securities' Ralph Acampora, Morgan Stanley Dean Witter's Peter Canelo and Merrill Lynch's Richard McCabe, spoke of high valuations and a necessary and likely market correction over the near term.
     In an interview with CNNfn's Trading Places Tuesday, McCabe said he expects earnings to play a greater role in the market than inflation and interest rates. McCabe also expects a near-term stock market correction to lay the foundation for a bull market that will start sometime in the second half of 1999 and last for two, maybe three, years.
     The bond market rallied, helped by overnight declines in the Japanese government bond yields and the stock market's nervous performance. The benchmark 30-year Treasury bond rose 17/32 of a point in price, lowering the yield to 5.30 percent.
     The dollar traded slightly lower against both the Japanese yen and the euro.
    
Day of the deal

     Investors hungry for more Internet deals got what they had asked for when news hit the market that Lycos (LCOS), the Web's second-largest portal, is being acquired by media giant USA Networks (USAI) in a stock swap. Exact terms of the deal are yet to be announced.
     The deal, which would combine USA's Internet and e-commerce operations, including TicketMaster Online-Citysearch (TMCS) and Home Shopping Network, with Lycos' search engine, will create a company with market capitalization between $18 billion and $20 billion and combined revenue of about $1.5 billion.
     Reports that Lycos shareholders stand to get only a small premium of about 2 percent, however, sent shares of the company down 24-1/4, or more than 19 percent, to 103. USA Networks gained 4-5/8, or more than 12 percent, to 42-9/16.
     Lycos rivals such as Yahoo! (YHOO), Infoseek (SEEK) and Netscape (NSCP) also found little demand for their shares. Yahoo!, the Web's premier portal, fell 14-5/16 to 144-5/16, Infoseek shed 6 to 59-1/8, and Netscape lost 4-9/16 to 63-3/8.
     Among the day's other news, American depositary receipts of British pharmaceutical powerhouse SmithKline Beecham (SBH) gained 1-7/8 to 68-1/16 on news the company is selling two U.S. units for about $2 billion and cutting 3,000 jobs, or 5 percent of its global workforce, over the next three years.
     SmithKline is selling its pharmacy benefits business, Diversified Pharmaceutical Services, to Express Scripts (ESRX) and its Clinical Laboratories unit to Quest Diagnostics (DGX).
     Elsewhere in the market, shares of Network Solutions (NSOL) tumbled 13-13/16 to 160-5/16 on news the company is planning a secondary offering of 4.58 million class A shares.
     High-tech blue chips, which stabilized Monday after a two-day beating at the end of last week, weakened again. Dow member IBM (IBM) eased 5/8 to 166-3/8. Microsoft (MSFT) was down 1-1/8 at 164-1/8, Intel (INTC) fell 4 to 128, Cisco Systems (CSCO) shed 3-15/16 to 98 and Dell Computer (DELL) lost 3-5/16 to 100-3/4.
     And New York City's largest drug-store chain, Duane Reade (DRD) rallied 1-7/8 to 33-1/4 after reporting better-than-expected earnings and announcing plans to open 20 more stores in the city this year.
     Finally, airline shares lost more altitude after Monday's declines, led again by shares of AMR (AMR), the parent of American Airlines, which lost 1-1/4 to 55-3/4. AMR canceled more flights Tuesday, including up to 90 percent of its flights from New York's Kennedy and La Guardia airports, amid a continuing dispute with the airline's pilots.
     Shares of Delta Air Lines (DAL) lost 1-1/8 to 54-13/16 and UAL (UAL), the parent of United Airlines, was down 1-13/16 to 62-1/8. The Dow Transports index shed 29.58 to 3,179.67. Back to top
     -- by staff writer Malina Poshtova Zang

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.