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Wednesday, Sep. 23, 1998
Dow dips as earnings fears send blue chips stumbling
Investors look past White House and eye Russia, Asia
By PATRICIA LAMIELL
Associated PressNEW YORK -- Blue-chip stocks fell Tuesday after swinging widely throughout the session, as anxiety about third-quarter earnings mounted. But broader market indicators rose, helped by technology issues.
The Dow Jones industrial average fell 36.05 to close at 7,897.20. The blue-chip index rose 53 points in early trading in response to stronger stock markets overseas. But it retreated to minus 77 points, rallied a second time and then dropped back again before the day was done.
Advancers led decliners by 4 to 3 on the New York Stock Exchange, where trading volume was moderate at a revised 698.19 million shares, up from Monday.
Investors turned their focus away from problems in the White House to problems in Asia and Russia, and how economic turmoil abroad will affect the earnings of U.S.-based multinational companies.
``We quickly came back to reality, which is earnings,'' said Barry Hyman, senior market analyst at Ehrenkrantz King Nussbaum. ``There's a fear that third-quarter earnings are really going to look pretty poor.''
A number of high-profile companies have warned that their third-quarter earnings may fall short of expectations, and more warnings are expected.
First Call Corp., which tracks earnings estimates, estimates that third-quarter earnings at companies in the Standard & Poor's 500 index will be 0.4 percent below those of the third quarter last year.
The last time earnings declined year-over-year was the fourth quarter of 1991, when they fell nearly 18 percent, said Tom O'Keefe, research associate analyst at First Call.
Investors bought smaller-company stocks, boosting broad market measures indexes. The Standard & Poor's 500 rose 5.74 to 1,029.63. The technology-heavy Nasdaq composite index rose 17.37 to 1,697.80.
The NYSE composite index rose 3.17 to 510.60, and the American Stock Exchange composite index rose 5.12 to 633.45. The Russell 2000 index of smaller companies rose 5.60 to 368.24.
Hyman was encouraged by the strength in small-company stocks. ``All the rallies that we've seen recently have been accompanied by an outperformance of the secondaries versus blue chips,'' he said. Technology stocks in particular, ``have been the engine for the economy in the last decade.''
Banking and financial services stocks, which took big hits on Monday, were mixed. Reiterating statements from the banks themselves, the Federal Deposit Insurance Corp. said global financial difficulties may hurt bank earnings by cutting into profits from overseas trading and lending.
Overseas stock markets made very strong showings. The Nikkei index in Tokyo rose 1.4 percent from its 12-year low on Monday. The DAX index in Frankfurt advanced 3.2 percent, the FT-SE 100 in London added 2.3 percent.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web