Blinding Blizzard of Worries Buries Stocks Deep

With so many concerns competing for their attention, traders decided to sell first and sort it out later.
Author:
Publish date:

No one seemed to want own

A Fistful of Dollars

today, and the greenback's slide against the yen took a big chunk of the blame for the deep selloff in the market.

The

Bank of Japan's

decision not to take action to weaken the yen sent the dollar diving against the Japanese currency. Not only did the news out of the BOJ not help the dollar, trade deficit data also added to the greenback's gloom. The U.S. trade deficit expanded to a record $25.2 billion in July. At a news conference this afternoon,

Treasury

Secretary

Lawrence Summers

declined to comment on the BOJ and said -- here's a real shocker -- that the strong dollar is in the national interest.

A sour start to the trading day never improved as major market gauges all suffered heavy losses, but managed to close off their worst levels of the day.

"The dollar is really the main problem," said Scott Curtis, senior equity trader at

Brown Brothers Harriman

. The trader also mentioned

Apple's

(AAPL) - Get Report

earnings warning as another factor in the market's decline.

When asked about the market's sentiment Curtis said he didn't think sentiment was overly negative. And he pointed out that the market's "just range-bound" and has been for months. Around 3 p.m. Curtis noted that volume was "pretty decent" on the Big Board.

Concern over the rise in long-term interest rates and continued worries over what the

Federal Open Market Committee

may or may not do at its Oct. 5 meeting didn't help. Also, the earthquake in Taiwan raised concerns about short-term problems production-wise for its semiconductor industry. The

Philadelphia Stock Exchange Semiconductor Index

fell 3.1%.

Meanwhile, the blue-chip

Dow Jones Industrial Average

tumbled 225.43, or 2.1%, to 10,598.47.

Hewlett-Packard

(HWP)

and

Goodyear

(GT) - Get Report

provided a beefy downside influence on the Dow. Goodyear tumbled after

J.P. Morgan

came out with negative comments and a downgrade of the stock.

The

S&P 500

shed 27.95, or 2.1%, to 1307.58.

The

Nasdaq Composite Index

fell 65.05, or 2.3%, to 2821.10.

Computer makers, which soared yesterday, got hammered, with the notable loser Apple.

TheStreet.com

wrote about the Apple situation in a story

last night. The

Philadelphia Stock Exchange Computer Box Maker Index

swooned 4.5%.

The small-cap

Russell 2000

surrendered 6.70, or 1.6%, to 426.50.

TheStreet.com Internet Sector

index tumbled 11.26, or 1.8%, to 617.74.

Watching 10,549

Stephen Shobin, chief technical analyst at

Lehman Brothers

, said the key support point for the Dow is 10,549, with a close under that level suggesting the Dow had made a medium-term top.

Shobin said the Dow is kind of a least common denominator between the

Nasdaq 100

and the S&P 500 because the Dow hasn't made as decisive a new high as the NDX but has exceeded the performance of the S&P.

The fact that

Goldman Sachs

(GS) - Get Report

blew by Wall Street expectations when it reported earnings did nothing to aid the brokerage sector, as the

American Stock Exchange Broker/Dealer Index

said goodbye to 2.1%.

On the winning side in the market today, the

Philadelphia Stock Exchange Gold & Silver Index

surged 6.6%.

Steven Goldman, market strategist at

Weeden

in Greenwich, Conn., said in his view this is not a time to commit capital to the market, a feeling he's had for numerous months. Goldman said he's in "preservation of capital mode" and has been since "more or less" April or May.

In fixed income, the benchmark 30-year Treasury bond fell 9/32 to 100 14/32, yielding 6.09%, weighed down in part by the dollar's tumble against the yen.

Market internals looked about as good as the injury-riddled

New York Jets

have so far this season. On the

New York Stock Exchange

, decliners destroyed advancers 2,350 to 679 on 817.3 million shares. On the

Nasdaq Stock Market

, losers bashed winners 2,671 to 1,266 on 1.04 billion shares.

On the NYSE, 270 issues set new 52-week lows while 36 touched new highs. On the Nasdaq, 121 issues set new 52-week lows while new highs totaled 70.

On the Big Board,

America Online

(AOL)

was most active with 22.4 million shares changing hands. It rose 2 1/16 to 84 7/8 after it said it's on track for record membership growth of AOL and

CompuServe 2000

services for the current quarter.

On the Nasdaq, Apple was most active with 30 million shares changing hands. It fell 9 7/8, or 12.5%, to 69 1/4.

Among other indices, the

Dow Jones Transportation Average

slumped 41.66, or 1.4%, to 2937.64; the

Dow Jones Utility Average

surrendered 6.42, or 2.1%, to 302.24; and the

American Stock Exchange Composite Index

lost 7.87, or 1%, to 784.98.

The Score Soon: Trading 22, Sleep 2

Just can't get enough of that after-hours, before-hours, whatever-hours trading?

Island ECN

and the

Datek

online brokerage are betting on it big-time. They plan to offer trading 22 hours a day and on weekends by next year, an official of their parent company said today.

The first step would be an extension of the current 8 a.m.-to-8 p.m. EDT Island session to midnight-8 p.m., probably within three months, said Edward Nicoll, president and COO of

Datek Online Holdings

. He was speaking at a

Bloomberg

online trading conference in New York.

Sometime later, probably next year, Island's session would swell to midnight-10 p.m., Nicoll said. Finally, trading would be extended into the weekend. Nicoll offered no details on the hours of the weekend session.

Datek and Island have no plans to extend the trading day past 10 p.m., as a two-hour break is needed for trade clearing and system maintenance, Nicoll said. The expanded hours are meant to appeal to investors in Asian and European countries, he said.

--

Caroline Humer

Elsewhere in North American equities, the

Toronto Stock Exchange 300

fell 131.16, or 1.9%, to 6917.90 and the

Mexican Stock Exchange IPC Index

dropped 79.04, or 1.6%, to 4919.79.

Tuesday's Company Report

By Eileen Kinsella
Staff Reporter

(

Earnings estimates from First Call/Thomson Financial; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Bestfoods

(BFO) - Get Report

, producer of

Skippy

peanut butter and

Hellmann's

mayonnaise, slipped 15/16 to 50 9/16 after saying it inked a deal to purchase sauce and seasoning maker

Case Swayne

. The merger's terms remain undisclosed, but it is estimated that Bestfoods would receive a $150 million boost in sales from the Case Swayne acquisition, to total more than $600 million a year. The merger comes one week after

The Wall Street Journal

reported that Bestfoods was negotiating a possible deal with

H.J. Heinz

(HNZ)

, which was lately off 3/4 to 42.

Getty Images

(GETY)

rose 1 3/16, or 5%, to 23 1/4 after it announced plans to acquire

Eastman Kodak's

(EK)

Image Bank

, in a deal valued at $183 million. Shares of Eastman Kodak slipped 1/8 to 74 13/16. According to the deal, Getty's purchase includes more than 60 million images and 30,000 hours of film footage from

United Press International

,

The New York Times

,

Reuters

, the

Chicago Historical Collection

and the

George Eastman House Collection

.

Mergers, Acquisitions and Joint Ventures

Bell Atlantic

(BEL)

added 15/16 to 64 9/16 and

Vodafone AirTouch

(VOD) - Get Report

climbed 4 5/8 to a record 216 5/8 after the companies said they forged a new nationwide U.S. wireless telephone pact. According to the deal's terms, Bell will hold a 55% stake in the venture, carrying a value of more than $70 billion.

Dutch supermarket company

Ahold

(AHO)

slipped 5/16 to 33 5/8 after it said it made a deal with Britain's

Hilton Food Group

to sell the main meat-processing division of

Albert Heijen

, the company's flagship supermarket chain.

Ericsson

(ERICY)

slipped 9/16 to 31 3/8 after it inked a $330 million mobile infrastructure pact with

Leap Wireless

(LWIN)

division

Cricket Communications

. The deal calls for Ericsson to provide Cricket with digital mobile systems that supply voice and data services. Leap jumped 5 7/16, or 31%, to 22 7/8.

Infospace.com

(INSP) - Get Report

slipped 1 3/4 to 41 3/4 after it said it's negotiating a possible acquisition of online auction technology provider

OpenSite Technologies

. The companies said they have submitted a nonbinding memorandum of understanding and filed for U.S. antitrust approval.

Qwest Communications

(QWST)

fell 9/16 to 29 5/8 and

U S West

(USW)

edged down 1/16 to 55 15/16 after the companies said that federal and state applications for their $35 billion agreement will be finished by tomorrow. In a joint statement, the companies said roughly 500,000 Qwest shareholders and a million U S West owners would receive a copy of their final joint merger proxy for their stockholder meetings on Nov. 2.

Suiza Foods

(SZA)

inched up 1/16 to 33 5/16 after it announced plans to buy

Southern Foods Group

in a deal valued at $6 billion. According to the terms of the transaction, Suiza would hold a 66.2% stake in the merger, with the remaining interest held by

Dairy Farmers of America

, which owns half of Southern Foods. The joint business, which will be known as

Suiza Fluid Dairy Group

, will receive raw milk from Dairy Farmers. Suiza said that Southern President and CEO Pete Schenkel will replace Suiza President and CEO G. Irwin Gordon, who has decided to leave the company, upon the deal's completion.

Earnings/Revenue Reports and Previews

Apple shares dropped 9 7/8, or 13%, to 69 1/4 after the company warned investors that it would post fourth-quarter earnings well below the previous quarter's 69 cents a share, missing the 19-analyst estimate of 76 cents,

Reuters

reported. Apple blamed the disappointing earnings on delivery problems with

Motorola's

(MOT)

G4 processor chips, which are used in Apple's Power Mac G4 computers. Shares of Motorola fell 2 13/16 to 87 7/8.

BE Aerospace

(BEAV)

lost 1 1/16, or 6.7%, to 14 7/8 despite posting second-quarter earnings of 55 cents a share, in line with the seven-analyst estimate of 55 cents and beating the year-ago 45 cents.

B.F. Goodrich

(GR)

lost 1 1/8 to 29 7/8 after warning investors that it would report disappointing fiscal 1999 results of around $3.20 to $3.30 a share.

Countrywide Credit

(CCR) - Get Report

climbed 1 1/4 to 31 3/8 after it posted second-quarter earnings of 91 cents a share, in line with the 15-analyst estimate of 91 cents and beating the year-ago 81 cents.

Discount Auto Parts

(DAP)

lost 3/4 to 17 after posting first-quarter earnings of 44 cents a share, missing the five-analyst estimate of 45 cents and the year-ago 42 cents.

Goldman Sachs

(GS) - Get Report

lost 1 5/8 to 59 1/8 despite posting third-quarter earnings of $1.32 a share, easily beating the 11-analyst estimate of $1.09 cents.

International Multifoods

(IMC)

lost 1/16 to 22 13/16 despite reporting second-quarter earnings of 27 cents a share, in line with the six-analyst estimate of 27 cents a share and beating the year-ago 24 cents.

OEA

(OEA)

fell 1/16 to 6 15/16 after posting fourth-quarter earnings of 2 cents a share, missing the three-analyst estimate of 4 cents a share but up from the year-ago 72-cent loss.

Pepsi Bottling Group

(PBG)

added 1 3/16, or 7%, to 17 11/16 after reporting third-quarter earnings of 59 cents a share, beating the three-analyst estimate of 55 cents but down from the year-ago 81 cents.

Western Digital

(WDC) - Get Report

slipped 3/8, or 8%, to 4 1/4 after it preannounced a first-quarter loss of $1.20 to $1.30 a share, well below the 11-analyst estimate of a $1.06 loss.

Offerings and Stock Actions

Alteon WebSystems

raised the size of its planned IPO to 4 million shares from 3 million and raised the expected share offering range to $17 to $19 a share from $14 to $16.

Lehman Brothers

is serving as the deal's lead underwriter.

Health Management

(HMA)

fell 1/8 to 8 1/16 after saying it set a 25 million-share buyback. The company just finished a 7.5 million repurchasing plan.

Mellon Bank

(MEL)

rose 1/6 to 32 1/2 after it set an additional 25 million-share buyback.

Optical Coating

(OCLI)

fell 2 1/8 to 88 5/8 after it set a 2-for-1 stock split.

Analyst Actions

Bed Bath & Beyond

(BBBY) - Get Report

tacked on 1 7/8, or 7%, to 30 13/16 after

Advest

raised its rating on the company to a strong buy from a buy. Last night,

Standard &Poor's

said the company would become part of the S&P index after trading closed today.

Coinmach Laundry

(WDRY)

slipped 1/16 to 9 7/8 after

Merrill Lynch

started coverage on the stock with near-term and long-term accumulate ratings.

Dan River

(DRF)

lost 1/4 to 6 3/8 after

IJL Wachovia

rolled out coverage with a neutral rating.

DuPont

(DD) - Get Report

slipped 1/4 to 61 7/16 after

Morgan Stanley Dean Witter

reinstated coverage with a strong buy rating.

Firstar

(FSR)

inched down 7/8 to 22 /16 after

Donaldson Lufkin & Jenrette

initiated coverage with a buy rating.

Goodyear lost 4 5/8, or 9%, to 47 5/16 after

J.P. Morgan

sliced its rating to a market perform from a long-term buy.

GST Telecommunications

(GSTX)

fell 3 5/16, or 30% to 7 19/32 after Morgan Stanley hammered down its price target on the stock to 15 from 18.

Banc of America Securities

cut its fiscal 1999 earnings estimates on Goodyear to $5.04 a share from $5.33.

Lincoln Financial

(LNC) - Get Report

shaved off 11/16 to 39 15/16 after J.P. Morgan started coverage with a market perform and set a price target of 45.

MGIC Investment

(MTG) - Get Report

added 1 5/16 to 44 11/16 after Lehman Brothers upped its fiscal 1999 and 2000 per-share earnings estimates to $4.03 from $4.00 and to $4.65 from $4.60, respectively.

Park Place Entertainment

(PPE)

added 3/8 to 10 15/16 after J.P. Morgan rolled out coverage with a buy rating and a price target of 14.

Rite Aid

(RAD) - Get Report

fell 1 3/16, or 7%, to 16 15/16 after Morgan Stanley sliced its rating to neutral from outperform.

Safeway

(SWY)

lost 1/16 to 45 1/2 after Morgan Stanley reinitiated coverage with a strong buy rating.

Tarrant

(TAGS) - Get Report

tacked on 7/16 to 11 1/4 after

Gruntal

initiated coverage on the stock with intermediate market-perform and long-term outperform ratings.

Tyco

(TYC)

lost 1 1/8 to 102 1/16 despite

Deutsche Banc Alex. Brown's

initiation of coverage with a strong buy rating.

Miscellany

ESS Technology

(ESST)

lost 9/16 to 13 15/16 after saying it chose Executive Vice President Robert Blair to become its president and CEO. Blair is replacing Fred Chan, who will continue to serve as the company's chairman.

PeopleSoft

(PSFT)

was unchanged at 17 3/8 after saying it tapped President and COO Craig Conway to serve as the company's CEO.

Taiwan Semiconductor

(TSM) - Get Report

added 7/16 to 30 15/16 after the company said an initial survey of the earthquake in Taiwan indicates that it could lose roughly 10% of September's wafer production. The company said the analysis is not complete and normal operations would resume gradually over the next several days.

ViewCast.com

(VCST)

slipped 5/8, or 9%, to 6 1/4 after saying it tapped George Platt to become its new president and CEO. Platt will replace William Jobe, who stepped down in July.