The quality of mercy is not strain'd,/It droppeth as the gentle rain from heaven
... and it has absolutely nothing to do with Wall Street. Just ask
The "Wild Place to Shop and Eat" chain is getting killed in today's trading, down 12 1/8, or 39.7%, to 18 7/16 after late
yesterday warning that it expects to miss fourth-quarter earnings estimates by a penny or two per share. A tiny little miss like that surely calls for mercy, right? Wrong, according to the Darwinistic paradigm of trading.
Rainforest Cafe's problem goes beyond that relatively small projected shortfall. The company said its three units open more than 18 months saw fourth-quarter same-store sales decline 11% -- not the kind of news that indicates a smooth transition from "splashy new place to try out once" to "repeat-business-generating institution."
It is, however, the kind of news that makes brokerages abandon their rosy outlooks and slash ratings.
Morgan Stanley Dean Witter
downgraded Rainforest Cafe to neutral from strong buy, as did
John G. Kinnard
cut the stock to neutral from buy.
Rainforest, today's second-largest percentage loser on the
Nasdaq Stock Market
, is hardly alone in suffering investors' wrath after previewing poor results.
led the percentage-loss list, off 8 3/16, or 40.8%, to 11 15/16 after warning of lower-than-expected first-quarter revenue and earnings. Also hurt on warnings were
, down 3 5/16, or 33.8%, to 6 5/8;
, down 1 1/8, or 28.1%, to 2 15/16;
, down 2 5/16, or 24.8%, to 7,
Track n' Trail
, down 1 1/2, or 20.7%, to 5 7/8;
, down 3 5/16, or 17.1%, to 16 1/8; and
, down 3/4, or 16.7%, to 3 7/8.
Nor are earnings warnings the only element of downward pressure. "The problem that started yesterday and continues today is the banks and the oils, particularly the banks today," said Jay Meagrow, vice president of sales and trading at
in Cleveland. He said banks are being hurt by concerns about a wave of debt refinancings, spurred by the recent dive in interest rates, and oil issues are suffering from the continuing slide in crude oil prices. (For a review of that group, click
was down 3 7/8 to 119 1/16,
was down 2 9/16 to 104 5/8 and
was down 2 15/16 to 66 3/16. In the oil patch, however, many stocks are enjoying a bounce from yesterday's weakness.
was up 5/8 to 74 1/4,
was up 9/16 to 59 9/16 and
was up 11/16 to 75.
The major equity indices, meanwhile, were seeing their losses accelerate and deepen at midday. Around 12:20 p.m. EST the
Dow Jones Industrial Average
was down 103 to 7803, the
was down 11 to 955, the
Nasdaq Composite Index
was down 27 to 1553 and the
was down almost 5 to 428. The benchmark 30-year Treasury bond was off 23/32 to 105 1/32 in price, its yield rising to 5.77%.