Blinding Blizzard of Worries Buries Stocks Deep
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 Apple Inc. Report
TheStreet Recommends
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 The Goodyear Tire & Rubber Company 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
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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 BlackRock Florida Municipal 2020 Term Trust 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
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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 Inspire Medical Systems Inc. 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 CONSOL Coal Resources LP 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 Goldman Sachs Group Inc. (The) 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
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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 Bed Bath & Beyond Inc. 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 DuPont de Nemours Inc. Report
slipped 1/4 to 61 7/16 after
Morgan Stanley Dean Witter
reinstated coverage with a strong buy rating.
Firstar
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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
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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
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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 Rite Aid Corporation 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
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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 Taiwan Semiconductor Manufacturing Company Ltd. 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.
