|
U.S. stocks severely hurt
|
 |
February 9, 1999: 5:27 p.m. ET
Nasdaq loses 4%, Dow wipes out gains for the year on valuation worries
|
NEW YORK (CNNfn) - Worried that stocks may have run up too far too fast and warned by several Wall Street watchers that the market is in for a correction, investors embarked on a heavy selling escapade Tuesday. The Nasdaq suffered its third-biggest daily point loss in history, and the Dow lost all of its gains for the year.
Selling was especially pronounced in the Internet sector, but the market slide was broad-based, with technology, transportation and drug stocks also losing ground.
The Nasdaq Composite took the biggest hit, shedding 94.13 points, or 3.9 percent, to 2,310.79.
The Dow Jones industrial average finished 158.08 points, or 1.7 percent lower at 9,133.03 and is now below where it started the year. The S&P 500 index fell 27.63, or 2.2 percent, to 1,216.14.
On the New York Stock Exchange, market breadth was heavily negative with declines leading advances 2,009 to 982 as 715 million shares changed hands.
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. (678K WAV) or (678K AIFF)
The bond market gained, helped by overnight declines in the Japanese government bond yields and the stock market's nervous performance. The benchmark 30-year Treasury bond rose 20/32 of a point in price for a yield of 5.30 percent.
The dollar lingered within narrow trading ranges against both the Japanese yen and the euro.
The big deal that couldn't
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 merger, 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 plummeting 33, or nearly 26 percent, to 94-1/4. USA Networks gained 3-11/16, or almost 10 percent, to 41-5/8.
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 17-7/8 to 140-3/4, Infoseek shed 7-7/8 to 57-1/4, and Netscape lost 5 to 62-15/16.
Among the day's other news, American depositary receipts of British pharmaceutical powerhouse SmithKline Beecham (SBH) gained 15/16 to 67-1/8 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).
Other drug stocks suffered a broad pullback, with Dow member Merck (MRK) losing 4-1/2 to 145-3/8, Pfizer (PFE) shedding 6-1/4 to 125-1/8 and Warner-Lambert (WLA) falling 2-3/4 to 69-15/16.
Elsewhere in the market, shares of Network Solutions (NSOL) tumbled 26-1/8, or 15 percent, to 148 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) dropped 4-1/4 to 162-3/4. Microsoft (MSFT) closed down 5-3/16 at 160-1/16, Intel (INTC) fell 6-11/16 to 125-5/16, Cisco Systems (CSCO) shed 6 to 95-15/16 and Dell Computer (DELL) lost 6-1/4 to 97-13/16.
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 1-1/2 to 55-1/2. 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 1-11/16 to 54-1/4 and UAL (UAL), the parent of United Airlines, finished down 2-3/4 to 61-3/16. The Dow Transports index shed 54.11, or 1.7 percent, to 3,155.14.
(Click here for a look at today's CNNfn market movers)
(Click here for a look at today's CNNfn technology stocks report) 
-- by staff writer Malina Poshtova Zang
|
|
|
|
|
 |
|
