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Profit worries shake up stocks
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April 13, 1999: 1:46 p.m. ET
Investors opt for caution ahead of Intel report after the closing bell
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NEW YORK (CNNfn) - Earnings concerns crept back into the stock market, cutting short an early rally and leaving U.S. stocks mixed in afternoon trading Tuesday.
The jitters, caused by anxiety ahead of one of the high-tech industry leaders' latest quarterly report, sapped the strength out of the Nasdaq and sent the Dow seesawing in and out of positive territory.
Intel, the world's largest computer-chip maker is due to report its quarterly profit after the closing bell. Although the company has issued no profit warnings, the market is showing signs of anxiety after another technology bellwether, PC maker Compaq, late Friday said its profit would fall more than 50 percent below expectations.
Shortly before 1:30 p.m. the Dow Jones industrial average was 1.94 points higher at 10,341.45. Market breadth on the New York Stock Exchange remained positive, but the margin between gainers and losers narrowed to 1,523 to 1,385 as trading volume reached 522 million shares.
The Nasdaq Composite, the index that hosts the majority of high-tech high players, fell 10.38 to 2,588.43. The S&P 500 index shed 10.47 to 1,348.16. (Click herefor a look at today's CNNfn market movers.)
Profit taking in the wake of Monday's record-breaking rally and weakness in bonds added to the stock market's reversal of fortune.
The bond market gained little support from news that consumer inflation remains benign, instead focusing a heavy load of corporate debt offerings on the horizon. News that Serbian troops briefly crossed the Albanian border gave short-term Treasury debt a short-lived boost, but the bellwether 30-year Treasury bond still sank 21/32 of a point in price, raising the yield to 5.49 percent.
The dollar gained ground against the euro as the conflict over Kosovo escalated, but slipped back against the yen.
Bullish news for broker stocks
Financial-services stocks, which led Wall Street into its record-breaking rally Monday, once again headed higher as earnings news from the industry continued to reveal strong growth and beat expectations.
Broker PaineWebber (PWJ) led the newsmakers Tuesday, reporting the best quarter in its 119-year history. Against forecasts for earnings of 73 cents a share, PaineWebber reported a profit of $1.01 a share. The stock jumped 3-3/4 to 47-5/16.
PaineWebber's news follows similarly strong earnings reports by Morgan Stanley Dean Witter (MWD) and Bear Stearns (BSC), and was followed by Wall Street's biggest brokerage, Merrill Lynch (MER), which shortly before the market opened reported first-quarter earnings of $1.44 a share, beating forecasts for $1.23 a share. Merrill's stock fell 2-1/4 to 97-11/16, succumbing to profit taking after Monday's strong advance.
Meanwhile, discount broker Charles Schwab (SCH), which Monday failed to join the financial rally, caught up with the crowd a day later, soaring 10-3/8 to 145-3/8. The company reports its earnings Wednesday.
Internet brokers were not left out of the buying avalanche, with Ameritrade (AMTD) soaring 22-1/4, nearly 16 percent, to 164-1/2, while E*Trade (EGRP) leapt 19-3/16, or almost 20 percent, to 115-3/16.
Banks help the Dow
Banking shares also got a boost, rising amid the general ebullience in the finance sector and some strong corporate earnings of their own.
SunTrust Banks (STI) reported Tuesday morning that, excluding charges relating to its merger with Crestar Financial, first-quarter profits came in at 91 cents per share, exactly what analysts had been looking for. Shares in the company jumped 1-3/4 to 71-3/8.
Other big banks lagged behind but still received buying attention from investors. On the Dow, Citigroup (C) climbed 15/16 to 74-15/16 and American Express (AXP) added 3/4 to 136-1/8.
Elsewhere in the Dow 30, forestry blue-chip International Paper (IP) climbed 2-7/8 to 49-1/4 after of its own profit report beat expectations, even though it showed a 70 percent decline in earnings from a year earlier. Paper rival Weyerhaeuser (WY) got a boost from its own forecast-topping profit of 51 cents per share, which helped lift the stock 15/16 to 63-1/16.
Earnings cast shadow on techs
Technology stocks cut short an early rally as earnings jitters continued to linger in the sector following Monday's bruising caused by a profit warning from Compaq (CPQ). Tuesday, the concerns were caused by Intel, whose results are due after the market closes.
Shares of Intel (INTC) eased 3/8 to 60-7/8 as investors opted for caution in case of an earnings surprise. Compaq, meanwhile, edged down 1/16 to 24, on top of the previous day's heavy losses.
Still, news of deals and projects in the works helped lift many of the high-tech leaders higher.
Among the leading newsmakers, shares of GeoTel (GEOC), a maker of telecommunications software for routing calls, surged 12-5/16 to 56-9/16, a gain of nearly 28 percent, after leading networking equipment maker Cisco Systems (CSCO) said it is buying the company for $2 billion in stock. Cisco's shares eased 2-11/16 to 115-1/16.
On the Dow, shares of IBM (IBM) edged 2-1/2 lower to 180-15/16 even after news Big Blue is expanding its Internet service providing business.
But fellow Dow computer maker Hewlett Packard (HWP) advanced 1-1/2 to 69-7/8 after the company repeated Tuesday it expects double-digit revenue growth this year and sees a recovery in Asian business growth.
Also among the gainers, shares of troubled database software maker Informix (IFMX) surged 1-19/32, or nearly 23 percent, to 8-19/32 as the company prepared to announce a fixed-price software package for building e-commerce Web sites.
Finally, shares of Dow member Coca-Cola (KO) climbed 1-11/16 to 63-9/16 after the world's largest soft-drink maker got a rating boost from Merrill Lynch. Merrill analyst Dan Lane raised his intermediate term recommendation on the stock to "accumulate" from "neutral," saying that the company has already seen the worst from rocky economic conditions overseas. 
-- by staff writer Malina Poshtova Zang with Robert Scott Martin
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