Muddled Market Moves Further Down

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"And now we're back where we started. Here we go round again."

Ray Davies

didn't know it when he wrote those words, but he was neatly summing up the course of the

Dow Jones Industrial Average

and the

S&P 500

in the two weeks ended today. The Dow closed Nov. 28 at 7823.13, rose to 8149.13 by Dec. 5, then finished today down 10.68 at 7838.30. The S&P stood at 955.40 on Nov. 28, surged to a new record of 983.79 by Dec. 5's close, then closed today at 953.39, down 1.55.

The tech-soaked

Nasdaq Composite Index

and the small-cap

Russell 2000

find themselves well under their levels of two weeks ago, however. The Comp closed Nov. 28 at 1600.55, rose to 1633.90 last Friday and today lost 21.96 to 1536.58. The Russell, which closed at 429.92 on Nov. 28 and 438.06 on Dec. 5, ended today down 2.07 at 422.63. A series of nerve-jangling earnings warnings and the prospect of slowing profit growth sent tech and small-cap stocks spiraling lower this week, and today didn't break that trend.

The downside standout was

Cisco

(CSCO) - Get Report

, battered 6 3/16 to 76 9/16 on the session's second-highest Nasdaq volume (26.7 million shares) as analysts pointed to troubling evidence of inventory problems in the networker's 10Q. Cisco's losses accelerated in the afternoon as a series of big block trades hit the tape.

The largest Nasdaq volume of the day, 32.2 million shares, belonged to an even bigger loser:

Electronics for Imaging

(EFII) - Get Report

. Deplaning in midair without a parachute, the stock plunged 24 1/16, or 61.9%, and smacked down at a nearly two-year low of 14 7/8 after warning of a vast fourth-quarter shortfall. The company expects earnings of 6 cents per share in the quarter, not the 49 cents analysts were hoping for. The stock lost so much value that

Prudential Securities

, which this morning downgraded EFII to hold from buy, restored the buy rating in the afternoon. (

TheStreet.com

looked at mutual funds damaged by the EFII collapse in a

story today.)

So with the markets such a muddled mess, is the blithely forecast Santa Claus rally even going to get down from the North Pole? "I think if it does it would be very late and probably not be very big because of the two major depressants on the market: growing concerns about 1998 earnings and, as a contributor to that, the Asian problems," said Eric Miller, chief investment officer at

Donaldson Lufkin & Jenrette

. "Both of those are going to take time. There isn't any quick fix, any magic bullet -- the area is going into recession. There are questions about business response, government response, labor response that are going to stretch on for months."

For weeks, the long side of the stock market has been asking for a sub-6% yield on the bellwether 30-year Treasury bond. Many marketeers said that would be the base and the spark for a jump to new highs (and not just 0.67 worth of a new high, as with the S&P's Dec. 5 mark). Well, today the long bond leapt 29/32 to 102 18/32 in price, the yield swooping to 5.94%. So?

"That's fine, it's great, we'll take it, but we've got to see the growth," said Marshall Acuff, portfolio strategist at

Salomon Smith Barney

. He said profit growth among S&P 500 companies will be 10% or 11% this year but will fall next year to 5% or less. "Even with low interest rates, that's not enough profit growth for the market to make new highs," said Acuff. "I'd rather get those profits."

All together, the picture for the next couple of weeks is one of big volatility and little actual movement, Acuff said: "I'm not optimistic that the market's going to run away on the upside, but it's not going to fall out of bed either."

Today's market breadth was either middling to negative. On the

New York Stock Exchange

, 1,465 advancers barely nudged past 1,427 decliners on 579.3 million shares. New Big Board highs outpaced new lows by a narrow 103 to 95. On the Nasdaq, 2,517 decliners led 1,847 advancers on 769.3 million shares. New Nasdaq lows bashed new highs by 250 to 108.

For the week, the Dow lost 310.83, or 3.8%; the S&P 500 lost 30.40, or 3.1%; the Nasdaq lost 97.28, or 6%; and the Russell 2000 lost 15.43, or 3.5%.

Friday's market action

(earnings estimates from

First Call

; new highs and lows on a closing basis unless otherwise specified):

Fine Host

(FINE)

was crushed 5 3/8, or 34.7%, to an all-time low of 10 1/8 before trading was halted in midafternoon. The company said it planned to put out a press release after the close.

MicroTouch

(MTSI) - Get Report

was slammed 7 1/8, or 34.3%, to a 52-week low of 13 11/16 on concerns about the company's Asian exposure.

Veeco Instruments

(VECO) - Get Report

plummeted 6 7/8, or 25.7%, to 19 7/8 after warning that its fourth-quarter earnings will be 40 cents to 45 cents per share. The nine-analyst consensus estimate called for 49 cents versus the year-ago 36 cents. The company blamed -- what else? -- delayed orders due to Asian turmoil.

Microsoft

(MSFT) - Get Report

skidded 2 5/16 to 136 3/4 after a federal judge late

yesterday ordered the company to stop requiring PC makers who license Windows 95 to accept Internet Explorer as well.

Netscape

(NSCP)

benefited, rising 1 5/16 to 27 7/8.

Qualcomm

(QCOM) - Get Report

stumbled 8 3/4, or 14.7%, to 50 11/16 after

Schroder

downgraded it to perform in line from outperform on concerns about the Korean market.

Able Telcom Holding

(ABTE)

fell 1 3/16, or 13.2%, to 7 13/16 after angrily responding to

Applied Cellular Technology's

(ACTC)

statement yesterday that it ended merger negotiations with Able. There never

were

any negotiations, Able said. Applied gained 3/32 to 5.

Sofamor Danek Group

(SDG) - Get Report

dropped 3 13/16 to 59 1/4 after a

Food and Drug Administration

panel late

yesterday asked for more data about its Novus LC spinal fusion cage.

Spine-Tech

(SPYN)

, Sofamor's chief rival in the spinal-fusion game, jumped 7, or 18.8%, to 44 1/4.

BancAmerica Robertson Stephens

upped its 1998 earnings estimate on Spine-Tech.

Centocor

(CNTO)

tumbled 5 1/8, to 12.9%, to 34 3/4 and

Immunex

(IMNX)

lost 3 1/8 to 47 1/2 after

Hoechst

trumpeted success with a drug for rheumatoid arthritis.

First State

(FSBT)

hopped 2 3/8, or 12.8%, to an all-time high of 22 after

Regions Financial

(RGBK)

agreed to acquire the bank in a $161 million deal. Regions edged up 1/8 to 41 7/8.

Littelfuse

(LFUS) - Get Report

slumped 2 3/4, or 10.8%, to 23 1/2 after saying it expects its fourth-quarter earnings to fall 10% short of the eight-analyst fourth-quarter estimate of 27 cents per share. The company, which earned 23 cents a year earlier, cited problems in South Korea.

Electronics for Imaging wasn't the only color-printing-technology company to suffer today.

Splash Technology

(SPLH)

dived 2 3/8, or 9.8%, to 21 3/4.

Ionics

(ION)

climbed 3 1/8, or 9.3%, to 36 11/16 after

Goldman Sachs

placed it on the recommended list.

Hadco

(HDCO)

shed 4 1/2, or 8.7%, to 47 1/4 after it renegotiated an existing line of credit to $400 million from $250 million.

Transition Systems

(TSIX)

ran up 1 5/8, or 8.6%, to 20 5/8 after

Jefferies

initiated coverage at buy with a 12-month price target of 29.

Flowers Industries

(FLO) - Get Report

improved 1 1/4 to 20 9/16 after late

yesterday saying it planned to increase its stake in

Keebler Foods

to 51% from 39%, contingent on a Keebler IPO.

Zion Bancorp

(ZION) - Get Report

gained 3 to an all-time high of 45 5/8 a day after the

Office of the Comptroller of the Currency

agreed to let the

Zion First National Bank

unit directly underwrite municipal bonds.

Medusa

(MSA) - Get Report

fell 1 11/16 to 38 1/8 after warning that it expects its fourth-quarter earnings to fall short of the year-ago 94 cents per share. The four-analyst expectation was for 97 cents.

IMC Global

(IGL)

declined 2 3/16 to a two-year low of 30 3/8 after agreeing to buy privately held

Harris Chemical Group

for $450 million in cash and $950 million in debt assumption.

MedImmune

(MEDI)

tacked on 1 1/4 to 40 after BancAmerica Robertson Stephens raised its 1997 and 1998 earnings estimates and upped its price target to 76 from 62.