It's a delicate house of cards, this market, and the threat of a crumbling ace of spades -- interest rates -- sent stocks and bonds whistling downward.
Inspired by a
Wall Street Journal
article saying the
is now biased toward tighter monetary policy, the bellwether 30-year Treasury bond's yield spiraled past the psychologically crucial 6% level to 6.07%. That, in turn, sent stocks reeling lower. Worst hit were transports and techs, with the
Dow Jones Transportation Average
down 109.35, or 3.1%, to 3448.67 and the tech-studded
Nasdaq Composite Index
down 48.65, or 2.6%, to 1820.31.
Dow Jones Industrial Average
declined a relatively modest 146.97, or 1.6%, to 8917.64, having bottomed around 2:45 p.m. EDT down 223.70 at 8840.91. Oil stocks
mitigated the Dow's losses as crude oil prices rose on refinery problems, and
gained as well. The rest of the Dow fell, led on the downside by
as drug and financial stocks suffered.
surrendered 21.36, or 1.9%, to 1086.54, and the small-cap
lost 11.82, or 2.5%, to 468.50. Among other indices, the
Dow Jones Utilities Average
dimmed 3.24, or 1.2%, to 276.76 and the
American Stock Exchange Composite Index
fell 12.86, or 1.7%, to 729.00.
Equity volume was a bit stronger than normal as market breadth hit its most negative levels since the Oct. 27 minicrash.
New York Stock Exchange
decliners whupped advancers by 2,866 to 319 on 686 million shares. New Big Board lows beat new highs by 105 to 16, the first time since January that lows have outpaced highs. On the Nasdaq, 3,685 decliners blasted 984 advancers on 803 million shares. New Nasdaq lows topped new highs by 89 to 66.
"Looking at the internal conditions of the market, this is the start of a sustained downturn if we close with worse than a 4-to-1 negative advance/decline ratio on the New York Stock Exchange," said Dan Ascani, president and director of research at
Global Market Strategists
in Gainesville, Ga. Today's nearly 9-to-1 negative split is "one of the largest negative advance/decline ratios coming a few business days after a new high that we've ever seen. That is significant according to our work."
Ascani said he expects the market to make a near-term bottom in mid-May, followed by a brief summer rally. But he said the market's days of easy run-ups are over for now. "We believe that money managers were willing to look at the first quarter positively and buy U.S. stocks despite the Asian crisis," he said. "But given the Asian crisis and Fed tightening, that's just too much."
Of course, the Fed isn't actually tightening yet. That's what worries Larry Rice, chief investment strategist at
. "If this is what they're going to do on a little bit of rumor, what are they going to do with a lot of facts?" he said. "You get a couple of upticks in interest rates, a couple of upticks in inflation and it's all over. It's not all over yet."
Rice does expect to see a rebound in the market, but he expects it to be a low-quality bounce. "It'll rally, but I'll tell you one thing: It'll be a rally of 50 to 100 stocks only," he said. "You won't see any better breadth. If I see the same old big stocks going up again, it's just another opportunity to sell."
Rice has been adhering for months to his view of the market as occupying an extremely overvalued space in an overall bull market. Now, with interest rates shaky, he sees even fewer reasons for confidence in most stocks. "The only thing anyone's grasping at these days to continue to buy stock is, they're looking at '99 numbers," he said. "And that's the biggest joke of all. How anyone can know what the '99 numbers are going to be is beyond me."
Elsewhere in North American equities, the
Toronto Stock Exchange 300
plunged 138.47, or 1.8%, to 7564.77 and the Mexican
plummeted 176.46, or 3.5%, to 4909.77.
Monday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified
Almost nothing was spared in today's selloff, with tech, financial and airline stocks among the hardest hit.
Weighing on the Nasdaq were
, down 2 to 80;
, down 1 3/4 to 90 5/16; and
, down 1 15/16 to 74 5/16.
Fueled by a report in London's
about a potential merger with
American International Group
managed to end the day a virtual financial anomaly, slipping only 1/4 to 101 5/8. AIG gave up 2 5/16 to 129 3/16. Meanwhile,
lost 1 7/16 to 132 5/8,
lost 5 9/16 to 149 5/8 and
lost 4 to 80 5/8.
The skies were no friendlier than the corridors of commerce:
sank 4 7/16 to 112 15/16;
sank 4 1/8, or 5.6%, to 69 9/16;
sank 5 5/16 to 146 3/4; and
sank 2 5/16 to 87 5/16.
Earnings reports and previews
dived 6 1/16, or 18.1%, to 27 1/2 after saying on Friday that it expects to report first-quarter earnings below the year-ago 44 cents per share. The three-analyst prediction calls for a profit of 49 cents. The company said its managed care products unit will produce losses in the first and second quarters.
gave up 3 1/8, or 15.3%, to 18 1/16 after saying an accounting change will cause the company to report second-quarter earnings about 4 cents below the two-analyst expectation of 31 cents per share.
flew 1 5/8, or 11.3%, to 16 1/8 after the company's CEO told
he had "no quarrel" with the single-analyst 1998 earnings estimate of $1.08 per share and 1999 estimate of $1.21 per share.
rose 2 7/8, or 8.5%, to 36 13/16 after announcing first-quarter earnings of 36 cents per share, above the seven-analyst forecast for 33 cents and the year-ago 35 cents. The company is also spinning off its billing and customer-management businesses into a separate subsidiary, dubbed
sank 1 5/8, or 5.4%, to 28 1/2 after announcing that it has discovered "cost overruns and possible accounting irregularities in its Beloit Corp. subsidiary, limited to four large, ongoing projects in Indonesia." The company estimates that it will take an extra $100 million charge.
Oxford Health Plans
took in 1/2 to 16 15/16 after reporting a first-quarter loss of 37 cents per share, beating the 19-analyst prediction for a loss of 64 cents. In the year-ago period, the company made 42 cents.
skidded 1 1/4 to 51 3/8 after reporting first-quarter earnings of 26 cents per share compared with the six-analyst estimate of 24 cents and the year-ago 18 cents. The company also filed for a 2.4 million-share offering.
rocketed 2 1/4, or 59%, to 6 1/8 after signing a year-long agreement with a
Johnson & Johnson
unit to market and promote selected Neoprobe products in America. Johnson & Johnson slipped 1 1/4 to 69 3/8.
sailed 7 5/16, or 31.5%, to 30 1/2 after
agreed to buy it for $33.39 per share, or $625 million. Blaming softness in Asian markets and production problems, Fluke also said fourth-quarter earnings will come in 25% to 30% below the three-analyst prediction of 44 cents per share. Danaher stumbled 4 1/4, or 5.8%, to 69 9/16.
sank 4 3/8, or 14.6%, to 26 after agreeing to merge with
in a stock swap to form
Bright Horizons Family Solutions
. Bright Horizons shareholders will exchange each share owned for 1.15 shares of the new company. Shareholders of CorporateFamily Solutions will exchange each share owned for one share of the new company. Bright Horizons rose 1 to 27 3/8.
rose 3 5/8, or 11.7%, to 34 3/4 after
agreed to buy it for $1 billion in cash or $35 per share. Lucent gave up 1 7/16 to 71 15/16.
Vitalink Pharmacy Services
gained 1 11/16, or 8.5%, to 21 1/2 after agreeing to merge with
Genesis Health Ventures
in a deal valued at about $690 million. Vitalink's shareholders can choose either $22.50 per share in cash or $22.50 in Genesis convertible preferred stock per share. Genesis decreased 15/16 to 24 13/16.
Bank of New York
lost 1/4 to 58 7/8 after
board rejected the company's $24 billion takeover offer yesterday. Bank of New York says that though it will not launch a hostile bid for Mellon, it will take its case to the bank's shareholders. Mellon fell 3 11/16 to 71 5/16.
Offerings and stock actions
skidded 7/8 to 67 7/8 after setting a 2-for-1 stock split payable on May 26 to shareholders of record May 11.
plummeted 8 1/2, or 30.9%, to 19 after
cut it to near-term neutral from buy and to long-term accumulate from buy.
downgraded the company's stock to attractive from buy and
Bankers Trust Alex. Brown
lowered it to buy from strong buy. On
Friday afternoon, Caribiner said it will report second-quarter earnings below expectations.
FPA Medical Management
lost 1 3/8, or 10.4%, to 11 15/16 after
Credit Suisse First Boston
cut it to hold from buy.
vaulted 2 1/4 to 63 7/8 after
raised it to strong buy from buy.
lowered 1 to 28 1/16 even after
raised it to buy from neutral with a $40 per share price target.
lost 5/8 to 22 1/4 after
Wheat First Union
downgraded it to outperform from buy. The company also announced it is changing its policies regarding amortization of its intangible assets and adopting a maximum of 25 years as the useful life for amortization of its intangible assets.
added 1 7/8 to 186 after Merrill Lynch upgraded it to near-term buy from accumulate.
soared 5 1/2, or 44.4%, to 17 7/8 after a
Food and Drug Administration
panel recommended approval of the company's new heart laser device.
swelled 7 7/8, or 29.4%, to 34 3/4 after
TV Media Holdings PTE
agreed to market the company's K-tel Express online service worldwide.
tumbled 15/16, or 6.6%, to 13 3/8 after the company
said it has become the subject of a federal grand jury probe focusing on the company's dealings with
, which has been charged with health-care fraud. Columbia lost 3/4 to 31 11/16.
lowered 4 13/16 to 113 7/16 even after prescriptions for its blockbuster drug
tripled in its second week of sales to 113,134.
fell 11/16 to 58 1/8 after announcing that it is selling
Matthew Bender & Co.
for $1.65 billion.
dived 1 11/16 to 40 after announcing on Friday that it will give coupons worth $500 to $1,000 to owners of
vehicles to be used toward the purchase of a new 1997, 1998, or 1999 model vehicle.
sank 7/16 to 50 1/4 after it was reported that
may buy 10 A340-500 jetliners from Boeing competitor
was flat at 17 after saying it would cut staff by 12% in an attempt to contain costs during a period of lower demand for its products.