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More anxiety on Wall Street
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October 6, 1998: 5:02 p.m. ET
Blue chips manage small gains, while technology stocks get pounded again
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NEW YORK (CNNfn) - U.S. stocks went through yet another roller-coaster market session Tuesday. Hopes that interest rates in the United States and Europe are bound to fall kept blue-chip issues afloat, but fears that corporate earnings are certain to suffer pushed big-name technology issues down for the second day in a row.
The Dow Jones industrial average finished 16.74 points higher at 7,742.98. The blue-chip index started the day with a 150-point gain, dropped more than 40 points in the afternoon, then bounced more than 80 in late trading. On the New York Stock Exchange, declines outnumbered advances 1,689 to 1,312 on trading volume of 844 million shares.
The Nasdaq Composite, which gained more than 2 percent in the morning, fell 25.80, or 1.7 percent, to 1,510.89, on top of Monday's nearly 5-percent drop. The S&P 500 index closed 3.97 lower at 984.59.
The stock market started the day with a rally, as investors sought bargains after Monday's beating and pinned their hopes on the vague possibility of interest-rate cuts in Europe and the United States after Spain lowered a key rate by 1/2 of a percentage point.
But a perception that the global economic woes won't go away easily, combined with little news of real action from the Group of Seven industrialized nations or the International Monetary Fund, soon cooled off buying enthusiasm and led to lower stock prices.
Chris Grisanti, director of research at Spears, Benzak, Salomon & Farrell, attributed Wall Street's poor performance to "erosion of the fundamentals" in the market and said he could see clear signs that an economic recession is in the cards. (215K WAV) or (215K ASIFF)
The bond market fell, as investors took a break from the dizzying rally of the past few weeks. The benchmark 30-year Treasury bond fell 7/32 of a point in price, raising the yield to 4.73 percent.
The dollar dropped significantly against the Japanese yen amid new talk of more economy-boosting measures from Tokyo. The greenback also fell against the German mark.
A failed recovery
In stocks, the market's biggest losers in Monday's steep sell-off were among the most volatile shares a day later. Technology blue chips, whose drop Monday sparked speculation among analysts that the market may be nearing the bottom of its current slump, rallied in the morning, then faded away.
Partially responsible for the early gains in the sector, Motorola (MOT), the technology and telecommunications-equipment maker, surprised investors late Monday, reporting third-quarter earnings that were sharply above market expectations. Motorola earned 7 cents a share in the last three months, excluding charges, down from 51 cents a share a year earlier, but well above the 1 cent Wall Street had anticipated. Motorola's stock soared 3-1/4, or more than 8 percent, to 41-13/16.
But shares of Cisco Systems (CSCO), which Monday admitted it had attracted antitrust scrutiny by the Federal Trade Commission and saw its stock drop 13 percent, dropped 2-1/8 to 46-3/16 after bouncing up in the morning.
Dell Computer (DELL) fell 2-3/8 to 55-5/16 and Intel (INTC) eased 15/16 to 79-5/8. Microsoft (MSFT) lost 3-9/16 to 97-5/8. Dow component IBM (IBM) closed 1 lower at 119-1/4.
Financial stocks, also carrying a black eye from Monday's pounding, attracted buyers in the morning and sellers as the day wore on. Citicorp (CCI) fell 1 to 85 and its soon-to-be parent and Dow member Travelers (TRV) finished unchanged at 34-1/2. The Wall Street Journal reported that Citicorp will soon fold its Citifunds Emerging Asian Markets Equity Funds.
Other financials also eroded, with Chase Manhattan (CMB) down 3/8 to 41-1/8 and BankAmerica (BAC) off 3/8 to 51-5/8. Among the Dow stocks, American Express (ASXP) fell 1-1/2 to 71 and J.P. Morgan (JPM) dropped 7/8 to 79.
Brokerages met a similar fate, with Merrill Lynch (MER) losing 1 to 41-15/16 and Lehman Brothers (LEH) gaining 13/16 to 27-7/16.
Elsewhere in the market, Alcoa (AA) became the first Dow member to report third-quarter earnings. The aluminum giant earned $1.22 a share in the quarter, beating Wall Street bets by 16 cents a share. The stock rallied 4-5/16 to 72-1/2.
Shares of Biogen (BGEN) climbed 3-3/16 to 68-3/8, after good sales of the company's Avonex drug for multiple sclerosis led to an 83 percent increase in earnings in the third quarter.
And Wal-Mart (WMT) rose 2-1/4 to 59-1/2 after reporting a 9.5 percent increase in same-store sales in September and announcing it will open more than 270 stores this year. Lehman Brothers reiterated its "buy" rating on the stock and raised its 1998 earnings estimate for the company by a penny to $1.91 a share.
But the stock of Sports Authority (TSA) plunged 1-1/16, or almost 16 percent, to 5-11/16 after the sporting-goods retailer said it is facing a loss of 27 to 32 cents a share in the third quarter. The company said it will post a restructuring charge of $1.72 a share, due to store closings and asset write-downs.
(Click here for a look at today's CNNfn market movers.) 
-- by staff writer Malina Poshtova Zang
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