Big-Cap Weakness Pushes the Market Down

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With Wall Street's windows pretty much fully dressed and ominous murmurs coming from the Middle East, stocks are contending with some broad-based weakness this midday.

Just as big-cap stocks have been the focus of the recent run-up, they're absorbing the hardest hits as investors seize profits. Around 12:30 p.m. EDT the

Dow Jones Industrial Average

was down 44, or 0.5%, to 8953 and the

S&P 500

was down 4, or 0.3%, to 1135, but

New York Stock Exchange

advancers were nudging past decliners by 1,431 to 1,283 on 294 million shares.

Walt Disney

(DIS) - Get Report

, reeling after a slew of negative analyst moves, was sucking 26.65 points out of the Dow with its decline of 6 11/16, or 6%, to 106 1/2.

Over in the tech-driven world, today's anti-big-cap bias was clear as well. The

Nasdaq Composite Index

was down 9, or 0.5%, to 1883, while the

Nasdaq 100

-- the measure of the Nasdaq's 100 largest non-financial stocks -- was down 8, or 0.6%, to 1331.

Microsoft

(MSFT) - Get Report

was down 1 1/8 to 106 1/4 on downbeat comments from

Morgan Stanley Dean Witter

, and

Intel

(INTC) - Get Report

was down 1 15/16 to 73 7/8. Meanwhile, the small-cap

Russell 2000

was off just 0.57 to 453.26.

Nasdaq Stock Market

breadth was modestly negative, with 2,065 decliners ahead of 1,719 advancers on 360 million shares.

Hanging in the background is news that a U.S. F-16 fired a missile at an Iraqi anti-aircraft battery after the installation's radar locked on four British jets on routine no-fly-zone patrol. The missile missed its target, but the radar was turned off.

"I don't know if it's Iraqi stuff per se," said Doug Myers, vice president of equity trading at

Interstate/Johnson Lane

in Atlanta, of the midday weakness. "It might be a little pullback from yesterday's market. It's just sort of a heavy feeling."

Myers said the strong

Consumer Confidence Index

for June from the

Conference Board

might also be having some influence. "It's one of those things where the economy, they're afraid it's overheating a little bit," he said.

One thing that's no longer much of an influence is window-dressing, the phenomenon whereby portfolio managers rush to buy the quarter's top-performing stocks by the end of the period. "I think that's in the past," Myers said. "I think a lot of that happened in the week of

triple-witching expiration. The four expiration months -- March, June, September and December -- a lot of the repositioning and reposturing that gets done, gets done in the last week before expiration.

"Now it's just business as usual, people trying to pick stocks," Myers went on. "I'm not seeing much of a trend here, it's just people doing the usual number-crunching on stocks and holding their nose and buying 'em."

The bond market was only slightly weak despite a plunge in dollar/yen, which was lately at 138.00 after hitting an overnight high of 142.40. The bellwether 30-year Treasury was off 8/32 to 106 18/32, its yield rising to 5.66%. (For more on the fixed-income market, see today's midday

Key Numbers

.)

Tuesday's Midday Movers

By

Heather Moore
Staff Reporter

Hambrecht & Quist Group

(HQ)

was soaring up 4 1/2, or 15.1%, to 34 3/8 this midday on renewed takeover talk. And as H&Q's stock continued to jump, its options also were picking up.

Discussed suitors included

Merrill Lynch

(MER)

, which was down 13/16 to 92 7/16, and

Donaldson Lufkin & Jenrette

(DLJ)

, which was down 1/4 to 50 5/8. Merrill, seeking to bolster its technology investment banking business, made a run at H&Q this year, but backed off over concerns about whether H&Q was involved in "spinning" IPOs, according to

The Wall Street Journal

. Spinning involves giving company executives IPO shares and then selling them for a quick profit, allegedly in exchange for investment banking business.

H&Q declined to comment on its stock activity.

--

Erle Norton

As mentioned above, Disney was down 6 11/16, or 6%, after a slew of earnings-estimate cuts.

Prudential Securities

slashed its annual estimate for the Mouse to $2.95 per share from $3.15 and its 1999 view to $3.50 from $3.75; Morgan Stanley Dean Witter trimmed its annual forecast to $2.92 per share from $3.13 and its 1999 outlook to $3.49 from $3.79; and

Schroders

lowered its annual prediction to $2.90 per share from $3.11 and its 1999 estimate to $3.26 from $3.48, while slicing its rating for the stock to neutral from outperform. The 22-analyst

First Call

consensus calls for 1998 earnings of $3.05 and 1999 earnings of $3.60.

Earnings movers

Advanced Health

(ADVH)

was down 3 5/32, or 34.4%, to 6 1/32 after saying it is restructuring elements of its physician practice management organization and that it expects to report a second-quarter operating loss of $3 million. The four-analyst estimate called for earnings of 23 cents per share versus the year-ago 9 cents.

MetaCreations

(MCRE)

was down 1 19/32, or 27.1%, to 4 3/8 after saying late

yesterday that it sees a second-quarter loss of up to 48 cents per share, including charges, because of a revenue shortfall.

CyberCash

(CYCH)

was down 1 7/8, or 13.2%, to 12 3/8 after saying late

yesterday it expects to report second-quarter revenue between $2.2 million and $2.5 million, up from last quarter and last year. The three-analyst estimate calls for a quarter loss of 63 cents per share, deeper than last year's loss of 58 cents.

TBC

(TBCC)

was down 15/16, or 12.6%, to 6 1/2 after saying late

yesterday it expects to report lower second-quarter sales and earnings than in it did the year-ago period.

Merix

(MERX)

was down 1 1/8, or 10.8%, to 9 1/4 after saying late

yesterday that it sees a loss of between 25 cents and 30 cents per share in its first quarter.

Quad Systems

(QSYS)

was down 9/32, or 10.1%, to 2 17/32 after saying late

yesterday it expects to record a third-quarter loss of 32 cents to 35 cents per share.

Paychex

(PAYX) - Get Report

was down 3 7/8, or 8.7%, to 40 3/4 even after posting fourth-quarter earnings of 17 cents per share, on target with the 10-analyst estimate and above the year-ago 13 cents.

HMT Technology

(HMTT)

was down 11/16, or 7.8%, to 8 1/4 after saying late

yesterday it expects to report a first-quarter shortfall because of industry conditions and customer inventory adjustments.

General Semiconductor

(SEM) - Get Report

was down 13/16, or 7.7%, to 9 11/16 after saying late

yesterday it expects second-quarter sales and earnings to come in below last quarter's figures.

In other news:

Grand Casinos

(GND)

was down 1 1/2, or 8.1%, to 17 after

Hilton

(HLT) - Get Report

agreed to acquire the company in a deal valued at $650 million. Hilton, which was off 1 3/16 to 30 5/16, will split into separate hotel and casino companies, merging the latter with Grand.

TheStreet.com

broke the news of the agreement in a

story early this morning.

AIDS drug makers

Agouron

(AGPH)

was off 4 3/8, or 13.1%, to 29 1/8 and

Vertex

(VRTX) - Get Report

was off 3 3/8, or 12.3%, to 24 1/8 following news out of a major AIDS conference in Geneva that showed

DuPont's

(DD) - Get Report

Sustiva

is a promising new therapy. Dupont was up 5/16 to 74 15/16.

Merck

(MRK) - Get Report

, which helped develop but only has rights to third-world sales of the drug, was lately down 5/16 to 132 7/16, after trading at 134 1/4 earlier. Also good for Merck was an approval from the

Food and Drug Administration

for the company's new migraine medicine,

Maxalt

.

Summit Holding Southeast

(SHSE)

was up 6 3/8, or 25%, to 32 after privately held

Liberty Mutual

agreed to acquire the company for $33 per share or $191 million.

Firstar

(FSR)

was up 4, or 11.9%, to 37 11/16 after

The Wall Street Journal

reported that the company is close to reaching a $5 billion merger agreement with

Star Banc

(STB)

. Star Banc was down 7/16 to 63 15/16.

Nationwide Financial Services

(NFS)

was up 3 1/16, or 6.5%, to 50 1/16 after

Bear Stearns

began coverage with a buy.

American Locker Group

(ALGI)

was up 5, or 18.1%, to an intraday high of 33 1/2 on no discernable news. "I'm as bewildered as anyone," CEO Harold Ruttenburg told

Reuters

. "Nobody has approached us, nobody has written a report, our earnings won't be out until the end of July."

As originally posted, this story contained an error. Please see

Corrections and Clarifications.