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Dow drags Wall St. down
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December 16, 1998: 11:46 a.m. ET
Investors sit on the sidelines as they digest more bad earnings news
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NEW YORK (CNNfn) - Blue chips threw cold water on Wall Street in late-morning trading Wednesday as investors continued to show their displeasure with shrinking corporate profits after another U.S. multinational issued an earnings warning.
Shortly before 11:30 a.m., the Dow Jones industrial average was down 53.04 at 8,770.26. Declines pushed ahead of advances by 1,518 to 1,239 on a trading volume of 269 million shares on the New York Stock Exchange.
The Nasdaq Composite slipped down 3.47 at 2,009.13, while the benchmark S&P 500 index gave up 2.56 at 1,160.27. (Click here for a look at today's CNNfn market movers).
In overseas markets, Japan seemed to ignore the Dow's 127-point rally on Tuesday, while European bourses moved higher.
Signs that the pace of home building has slowed didn't seem to generate much interest with investors.
Bonds opened lower on Wednesday, as investors watched to see whether the United States would bomb Iraq. Oil prices were sharply higher. The 30-year Treasury bond was down 9/32 of a point in price for a yield of 5.04 percent.
The United Nations evacuated weapons inspectors in Iraq as the threat of a U.S. military strike loomed large.
The dollar was also mixed, with the greenback losing ground against the Japanese yen but gaining against the German mark. The dollar fetched 1.66 marks and 115.80 yen.
More earnings woes
Dow member Minnesota Mining & Manufacturing (MMM)(MMM), maker of adhesives and specialty chemicals, led blue chips lower after reporting it expects fourth-quarter profit to drop about 10 percent from last year. Many analysts expect the 3M news to weigh heavily on the benchmark index. The stock was down 3-3/16 at 70-9/16.
"It's one more Dow component that's saying things aren't exactly rosy out there," said Bill Meehan, chief market strategist at Cantor Fitzgerald in Stamford, Conn. "It's forcing people to face the reality that the global economy and the earnings forecasts for 1999 don't justify higher stock prices."
Mattel (MAT), Caterpillar (CAT), Coca-Cola (KO) and Procter & Gamble (PG) are among the big U.S. multinationals who have warned investors about shrinking profits in recent sessions.
Home-appliance firm Sunbeam Corp. (SOC), which restructured under the direction of former chief executive "Chainsaw" Al Dunlap, rose after reporting steep second- and third-quarter losses. The stock was up 5/16 at 6. Analysts said investors may be buying shares as a long-term hold despite the bad news.
Big technology names followed the Dow's lead and also moved into negative territory. Chipmaker Intel Corp. (INTC) lost 7/8 at 115-1/16, while computer giant IBM (IBM) was off 7/16 at 164-9/16 even though C.S. First Boston boosted its target share price to $185 from $160.
Likewise, banking stocks suffered, with BankAmerica Corp. (BAC) down 5/8 at 56-1/2.
But not all the earnings news was bad. Internet advertising company CMG Information Services (CMGI) rose after reporting earnings of $1.54 per share, compared with 12 cents per share last year. The stock was up 4-3/4 at 79.
Online bookseller Amazon.com (AMZN) bucked the trend and got a big boost after CIBC Oppenheimer raised its target share price to $400 from $150. The stock jumped 44-3/8, or 18.28 percent, to 287-1/8.
UAL Corp. (UAL), parent of United Air Lines, also rose after forecasting its 1999 earnings would beat expectations. The stock was up 1-3/8 at 59-13/16.
In the oil sector, Dow heavyweights Exxon (XON)and Chevron (CHV) ignored the 3M news and moved ahead on the higher oil prices and worries about the Iraq situation. Exxon rose 13/16 at 74-13/16, while Chevron added 1/4 at 83-1/4.
-- by staff writer Martine Costello
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