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Dow gives up 10,000 for now
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March 12, 1999: 5:22 p.m. ET
Caterpillar profit warning, tech stock weakness halt the Dow's milestone rally
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NEW YORK (CNNfn) - Profit warnings and concerns about technology stocks interrupted the Dow's pursuit of 10,000 Friday, leaving the milestone number unconquered and up for grabs perhaps next week.
Weighed down by its technology components and heavy-equipment maker Caterpillar Inc., the Dow closed 21.09 points lower at 9,876.35. Still, the Dow rose 1.44 percent since last Friday, hiking its gain for the year to 7.57 percent.
Declines outpaced advances 1,573 to 1,373 as 823 million shares changed hands on the New York Stock Exchange.
The Nasdaq Composite fell 30.72 points, or 1.3 percent, to 2,381.53. The S&P 500 index eased 3.09 to 1,294.59. The Nasdaq climbed 1.90 percent this week, for a gain for the year of 8.61 percent. The S&P 500 index advanced 1.50 percent on the week, increasing its gain for the year to 5.32 percent.
The market's interrupted rally, which pushed the Dow to within about 42 points of 10,000 in the morning, was carried on the back of a resurgence among traditional blue chips like oil and financial shares. But Marshall Acuff, stock strategist at Salomon Smith Barney, said he is somewhat puzzled by investors' reaction to rising oil prices -- after all, that would suggest rising inflation, and ultimately higher interest rates. (393K WAV) or (393K AIFF).
Acuff, who expects the Dow to reach 10,000 quite soon, sees little upside potential for the blue-chip index in the immediate future following that.
"We don't necessarily have to have a correction. We can continue in a sideways, consolidation period over time," Acuff said.
Wall Street got a boost in the morning from news producer prices fell 0.4 percent in February, compared with expectations of a 0.1 percent decline. The data confirmed a view among market players that all is well in an economy growing at a healthy pace, but generating no inflation. Yet, even some supporters of that view were skeptical about the longer-term interest rate outlook.
"It has been a great story -- strong growth and no inflation and low interest rates, but my bet is that one area that will be a little bit of a challenge to stocks will, over time, be interest rates," said David Jones, chief economist at Aubrey G. Lanston.
The bond market rose, pushed higher by the PPI numbers, the biggest drop in the index since January 1998. The bellwether 30-year bond rose 17/32 of a point in price, lowering the yield to 5.54 percent.
The dollar recovered from its initial shock after the sudden resignation of German Finance Minister Oscar Lafontaine Thursday, and regained some ground against the euro. The dollar, however, continued to fall against the yen.
Techs halt the advance
Technology stocks, largely responsible for the bull market of 1998 and the first part of 1999, this time spoiled the broad market rally, as investors, showing signs of concern over growth in the sector, displayed a newfound taste for traditional blue-chip stocks like consumer-oriented and cyclical issues, which thrive in the midst of a healthy economy.
Noting the reversal of market leadership, Acuff said investors should also beware the beginning of the first-quarter earnings preannouncement season, during which many stocks could suffer as their companies reveal they may not meet market expectations. (616K WAV) or (616K AIFF)
Confirming Acuff's warning, and weighing down on the high-tech sector, shares of Oracle (ORCL) tumbled 8-5/16, or 22.5 percent, to 28-9/16 after late Thursday the software maker reported strong fiscal third-quarter earnings but disappointing revenue growth. Six brokerages, including Donaldson, Lufkin & Jenrette, Merrill Lynch and NationsBank Montgomery Securities downgraded the stock.
Oracle's largest rival, Microsoft (MSFT) also took a hit, shedding 1-1/4 to 160-3/16 after the company said it plans to announce a broad restructuring. Late Thursday, Microsoft told analysts its fiscal third-quarter earnings will meet expectations but revenue will suffer because of accounting adjustments related to its Office 2000 business software suite.
Elsewhere in the high-tech universe, shares of Dow component IBM (IBM) lost 4-7/8 to 178, and fellow Dow 30 member Hewlett Packard (HWP) inched up 3/16 to 69.
Shares of Intel (INTC) closed up 1/8 at 118-1/4 and Cisco Systems (CSCO) fell 2-1/4 to 103-1/4. Dell Computer (DELL) inched up 5/16 to 42-3/16, Gateway (GTW) eased 3/4 to 67-1/2 and Compaq (CPQ) finished unchanged at 30-1/4.
Countering the shaky performance among techs, Internet advertiser DoubleClick (DCLK) soared 24-9/16, or more than 23 percent, to 131 after the company announced a 2-for-1 stock split.
Internet service provider Prodigy (PRGY) climbed 2-1/4 to 43 after it reported a smaller-than-expected first-quarter loss.
Oil peters out
Oil shares, which helped lead the Dow to record closes twice this week, showed signs of weariness, despite surging world oil prices. Ministers from the world's top oil producers agreed to output cuts to fight a world oil glut, news that was encouraging for the oil market, but failed to prevent a bout of profit taking in the sector.
On the Dow, shares of Exxon (XON) eased 13/16 to 73-15/16 and Chevron (CHV) closed 3/8 lower at 84-11/16. Exxon's merger partner, Mobil (MOB) fell 1-1/2 to 93-1/16.
BP Amoco (BPA), one of the rally's leaders earlier in the week, slipped 1/16 to 95-7/8.
In the oil-services sector, Schlumberger (SLB) closed 9/16 lower at 56-7/16.
Caterpillar digs deeper
The Dow's ascent toward 10,000 was tripped further by losses in component Caterpillar (CAT), which issued a first-quarter profit warning, saying it will miss earnings forecasts by 50 percent, shut down plants, reduce production and cut jobs. Caterpillar's stock dropped 6-3/16, or more than 12 percent, to 44-11/16.
Financials wake up
The positive economic outlook, and the absence of signs of inflation helped breathe life into the financial-services sector, a trend that helped limit the Dow's losses.
Among the financial members of the 30 blue chips, shares of American Express (AXP) climbed 2-3/4 to 126-1/4 and J.P. Morgan (JPM) advanced 2-13/16 to 122. Citigroup (C), also a Dow component, finished unchanged at 65-15/16 even after BT Alex. Brown raised its first-quarter and full-year earnings estimate for the banking, insurance and financial services conglomerate.
Transports pick up
Transportation stocks, which had suffered weakness caused by the recent advent of oil, regained some ground Friday, driving the Dow transports index up 9.86 points to 3,267.51.
AMR (AMR), the parent company of American Airlines, gained 2 to 58, Delta Air Lines (DAL) rallied 3-1/2 to 64, and UAL (UAL), the parent of United Airlines, finished up 2-1/16 to 67-1/16.
(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
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