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Wall St. under pressure
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October 21, 1999: 11:48 a.m. ET
IBM profit warning triggers technology and broader market selling
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NEW YORK (CNNfn) - U.S. stock markets crawled off the day's lows but still sustained heavy losses at midday Thursday, dragged down by losses in the technology sector after an unexpectedly disappointing third-quarter bottom line report and a profit warning from IBM.
Shortly before 11:30 a.m. ET, the Dow Jones industrial average fell 137.72 points, or 1.4 percent, to 10,254.64. On the New York Stock Exchange, losers jumped ahead of gainers 1,783 to 866 on trading volume of 371 million shares.
The Nasdaq composite index fell 29.83 points, or 1 percent, to 2,758.30, and the S&P 500 index lost 13.71, or 1.1 percent, to 1,275.72. (Click here for a look at today's CNNfn hot stocks.)
The bond market, however, rose as investors rushed back to the safety of U.S. government debt securities and away from the tumbling stock market -- especially after the European Central Bank opted to leave interest rates unchanged. The benchmark 30-year Treasury bond rose 4/32 of a point in price, its yield easing to 6.32 percent from 6.33 percent late Wednesday.
The dollar fell against both the yen and the euro.
IBM results rattle techs, broad market
In the stock market, investors sold blue-chip technology stocks they had bought in the previous day's rally. The sell-off came after sector leader IBM (IBM) reported third-quarter earnings that met expectations, but also said Y2K problems hurt revenue in the quarter -- and issued profit warnings for the fourth quarter and the first quarter of 2000.
Shares of Big Blue plunged 14-3/4, or nearly 14 percent, to 92-1/4, driving the Dow industrials sharply lower. Several brokerages downgraded the stock. Among them, Lehman Brothers lowered its rating of the company to "outperform" from "buy," and Merrill Lynch downgraded IBM to "near-term neutral" from "near-term buy."
IBM's woes spread throughout the technology sector. Hewlett Packard (HWP), the other Dow technology component, lost 2-5/8 to 73-15/16.
On the Nasdaq, Microsoft (MSFT), whose own strong earnings helped fuel Wall Street's rally Wednesday, saw its shares lose 7/16 to 91-13/16. Intel (INTC) eased 7/16 to 69-1/2, Cicso Systems (CSCO) dropped 1-5/16 to 68-5/8 and Dell Computer (DELL), which two days earlier issued a profit warning of its own, lost 1-3/16 to 38-13/16.
On the positive side, however, shares of made-to-order computer firm Gateway (GTW) rallied 6-5/16, or more than 12 percent, to 58-5/16 after the company's third-quarter earnings of 1 cent a share came in ahead of Wall Street predictions. A strategic alliance with America Online (AOL) also helped propel Gateway's stock higher. The two companies are to co-brand and distribute each other's products and share profits.
AOL's shares rose 2-1/4 to 120-1/4 after the online service provider late Wednesday reported stronger-than-expected fiscal first-quarter results.
Non-tech earnings mostly strong
Earnings from several of the Dow's non-technology components came in largely ahead of expectations, lifting the underlying stocks and helping cushion the blue chip index's fall.
Among the positive surprises, pharmaceutical powerhouse Merck (MRK) reported a 13 percent jump in net profit in the third quarter, matching analysts' expectations. The stock gained 2-1/4 to 77-15/16.
Meanwhile, soft-drink titan Coca Cola (KO) registered an 11-percent decline in third-quarter profit but still matched lowered market forecasts and the stock jumped 1-1/8 to 53-7/8.
Finally, Dow retail component Sears Roebuck (S) saw its stock ease 7/16 to 28-9/16 after reporting third-quarter profit that beat analysts' estimates, even though it was 10 percent lower than in the same quarter a year earlier. 
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