Stocks Retreat as Bond Yields Swell to Highs

The long bond's yield has risen to 6.28%, and stock traders don't like it one bit.
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Like fans of the

New York Mets

after last night's game against the

Atlanta Braves

, investors wanted to look past negative news like weak earnings reports and believe in more positive factors, like a stronger dollar vs. the yen.

But pessimism and interest-rate jitters were winning out in morning trading, as major proxies picked up where they left off yesterday and continued to slide. (Of course, unlike today's market, the Mets

will

have a comeback.)

The

Dow Jones Industrial Average

was down 108, or 1%, to 10,309, while the broader

S&P 500

was off 18, or 1.4%, to 1295.

Intel's

(INTC) - Get Report

disappointing earnings news announced

last night was putting pressure on the technology stocks and the

Nasdaq Composite Index

which was lately down 44, or 1.6%, to 2828. Intel was off 5.2%.

But some didn't see the fallout from the earnings report as all that harsh. Semiconductors "are still showing some signs of life," said Bryan Piskorowski, market analyst for

Prudential Securities

. One progression in recent years, he said, is recognition of the segmentation of bellwethers like Intel and other companies, so there is not a "sweeping downside" based on a single negative earnings report. The

Philadelphia Stock Exchange Semiconductor Index

was down 1.2%.

Others thought the reaction to the news was too muted. "Most companies that missed earnings would have gotten really hurt. But Intel is the darling of the street and is treated with kid gloves," said Larry Rice, chief investment strategist at

Josephthal

. Rice saw it as emblematic of a larger problem of heavyweight technology stocks accounting for too big a percentage of the Nasdaq's strength in recent months.

Shares of

Abercrombie & Fitch

(ANF) - Get Report

were, like, sooo out of style after the company reported a slump in its October sales. Never mind that third-quarter same-store sales climbed 12%, or that the company said it is still on track to meet its earnings estimates. "We want the bad news!" shouted investors, who stripped the stock down 19.2%.

Oil sector stocks were enjoying a pop with the

Philadelphia Stock Exchange Oil Service Index

up 2.6%, and the

American Stock Exchange Oil & Gas Index

up 1.6% amid signs that

OPEC

production discipline is taking effect.

Investors can expect more choppy trading and volatility as earnings releases with economic indicators later this week. September

retail sales

figures are scheduled to be released tomorrow, and Friday brings the September

Producer Price Index

. "The Fed is scrutinizing every number and so are we," said Piskorowski of Prudential.

"This is a market which is sailing against the headwinds of rising rates," said Thomas Madden, chief investment officer for U.S. equities and high yield at

Federated Investors

. Indeed, the benchmark 30-year Treasury was down 20/32 to 97 30/32, its yield rising to a recent high of 6.28%.

On the much-ignored positive side, the dollar was up at 106.62 yen after the

Bank of Japan

said it would leave short-term interest rates unchanged but start buying short-term government debt in the open market to increase liquidity in the banking system.

On the

New York Stock Exchange

decliners were trouncing advancers 1,929 to 937 on 467 million shares. On the

Nasdaq Stock Market

laggards were beating leaders 2,285 to 1,235 on 566 million shares. New 52-week lows were leading new highs 217 to 11 on the Big Board while new lows were topping new highs 94 to 37 on the Nasdaq.

In sympathy with its tech brethren,

TheStreet.com Internet Sector

index was down 18, or 2.6%, to 706. The small-cap

Russell 2000

was off 4, or 1%, to 420.

Wednesday's Midday Watchlist

By Tara Murphy
Staff Reporter

Intel after yesterday's close posted third-quarter earnings of 55 cents a share, shy of the 23-analyst consensus estimate of 57 cents, but above the year-ago 45 cents a share.

TheStreet.com

wrote about Intel's earnings in a story

last night.

Credit Suisse First Boston

cut its per-share earnings forecast for 1999 on the chip giant to $2.23 from $2.31 and its 2000 forecast to $2.55 from $2.66, while, Meanwhile,

SG Cowen

sliced its Intel to neutral from buy. Intel was falling 4, or 5.2%, to 72 11/16.

Consolidated Edison

(ED) - Get Report

, which was unchanged at 36 7/16, confirmed it's buying

Northeast Utilities

(NU)

, which was climbing 1/8 to 21 3/8, for about $3.3 billion in cash and stock. Con Ed said it would pay $25 a share for Northeast. Northeast closed yesterday at 21 1/4.

Mergers, acquisitions and joint ventures

Chris-Craft Industries

(CCN)

, a TV-station operator, is exploring the sale of part or all of the company with companies including

CBS

(CBS) - Get Report

,

News Corp.

(NWS) - Get Report

and

Tribune

(TRB)

,

The Wall Street Journal

reported, citing people familiar with the talks. Shares of Chris-Craft were jumping 8, or 13.6%, to 66 1/2.

Nokia

(NOK) - Get Report

was unchanged at 98 1/4 after it said it was joining with

3Com

(COMS)

to develop pen-based wireless handheld computers. Shares of 3Com were bouncing 1 7/16 to 30 1/2.

Earnings/revenue reports and previews

Abercrombie & Fitch was plummeting 6 1/4, or 19.2%, to 26 1/4 after it that it suffered a decline in October sales, but it is still confident that it will post earnings in line with analysts' estimates. The company said in a statement that "strong back-to-school increases have been reduced somewhat by less favorable results from the company's regular October sales event." The 23-analyst estimate forecasts Abercrombie to report third-quarter earnings of 31 cents a share.

Bear Stearns

(BSC)

was sinking 4 1/4, or 10.5%, to 36 after it reported first-quarter earnings of $1 a share, 15 cents shy of the five-analyst estimate.

Bestfoods

(BFO) - Get Report

was advancing 1 3/8 to 50 3/8 after it reported third-quarter earnings of 64 cents a share, above the 15-analyst estimate of 61 cents and up from the year-ago 56 cents.

Delphi Automotive

(DPH)

was up 3/8 to 16 1/2 after it reported third-quarter earnings of 24 cents a share, beating the 12-analyst estimate by a penny, and up from the year-ago pro forma 38-cent loss.

Dexter

(DEX) - Get Report

was slipping 1/4 to 35 7/16 after it reported third-quarter earnings of 55 cents a share, in line with the two-analyst estimate, but below the year-ago 61 cents. The company said the latest quarter included a pretax charge of $3.9 million, or 8 cents a share, for a refund related to a supply contract with the

Department of Veterans Affairs

.

Ethan Allen

(ETH) - Get Report

was adding 3/4 to 30 3/4 after it posted first-quarter earnings of 45 cents a share, better than the 12-analyst estimate of 43 cents and up from 38 cents a year ago.

W.W. Grainger

(GWW) - Get Report

was gaining 1 1/8 to 44 3/4 after it reported third-quarter earnings of 49 cents a share, a penny shy of the 12-analyst estimate and down from a year-ago 57 cents.

Hughes Electronics

(GMH)

was declining 3/4 to 64 1/2 after it reported a third-quarter loss of 13 cents a share, better than the 14-analyst estimate of a 16-cent loss, but down from the year-ago 11-cent profit.

Investment Technology Group

(ITG)

was jumping 5/8 to 19 1/2 after it reported third-quarter earnings of 34 cents a share, a penny below the four-analyst estimate and down from 45 cents a year ago.

Knight/Trimark

(NITE)

was hopping 3/16 to 25 5/16 after it posted third-quarter earnings of 19 cents a share, compared with a revised 10-analyst estimate of 18 cents, following the company's earnings warning. Pro-forma year-ago earnings were 13 cents a share.

Motorola

(MOT)

was falling 2 1/8 to 92 13/16 after it reported, after the close, third-quarter earnings of 53 cents a share, in line with the 27-analyst estimate and up from the year-ago 7 cents a share.

Separately, Motorola and

America Online

(AOL)

announced plans to launch a wireless instant messenger. Shares of AOL were climbing 13/16 to 114 5/8.

Riggs National

(RIGS) - Get Report

was mounting 3/16 to 17 1/8 after it posted third-quarter earnings of 34 cents a share, beating the five-analyst estimate of 32 cents and the year-ago 29 cents.

Rowan

(RDC)

was skidding 1 11/16, or 10.1%, to 14 7/8 after it reported third-quarter earnings of 1 cent a share, above the 24-analyst consensus of breakeven results, but down from a year-ago 38 cents. The company said third-quarter net fell on a $16 million contract dispute.

Separately, Rowan said it set plans for a 10 million-share offering, which will be managed by

Lehman Brothers

.

Time Warner

(TWX)

was declining 5/16 to 63 after it posted third-quarter basic income of 8 cents a share, above the 13-analyst estimate of 4 cents a share, and up from the year-ago loss of 3 cents a share.

Valley National Bancorp

(VLY) - Get Report

was retreating 5/16 to 25 9/16 after it reported third-quarter earnings of 45 cents a share, a penny better than the 8-analyst estimate and up from the year-ago 42 cents.

Offerings and stock actions

Fleet Boston

(FLT) - Get Report

has ditched plans for a possible spinoff and IPO of

Suretrade

, its online brokerage unit, the

Journal

reported. Fleet Boston was stumbling 1 1/16 to 37 3/16.

Analyst actions

Bob Evans Farms

(BOBE)

was falling 3 7/8, or 19.6%, to 15 7/8 after DLJ cut the shares' rating to a market perform from a buy and set a price target of 22. Yesterday, the company warned investors that it sees second-quarter results below analysts' estimate of 42 cents a share.

Dial

(DL) - Get Report

was mounting 1 1/8 to 23 15/16 after

Merrill Lynch

upped its rating to near-term buy from accumulate.

E-Tek Dynamics

(ETEK)

was plummeting 5 5/16, or 7.9%, to 61 3/4 after

First Albany

upgraded its shares to accumulate from neutral, saying "the company has taken significant steps to address the shortage issue it faced last quarter." Yesterday,

TheStreet.com

reported on the company's

third-quarter results.

General Dynamics

(GD) - Get Report

was sliding 4 15/16, or 8.5%, to 52 3/4 after SG Cowen downgraded the shares to neutral from buy.

PaineWebber

(PWJ)

was declining 1 7/16 to 33 9/16 even after

Warburg Dillon Read

raised its fourth-quarter earnings estimate to 83 cents a share from 62 cents, while raising

Merrill Lynch's

(MER)

fiscal 1999 estimates to $5.60 a share from $5.50. The firm also upped its fiscal 1999 estimate on

Donaldson Lufkin & Jenrette

(DLJ)

, to $3.65 a share from $3.50. Shares of Merrill Lynch were retreating 1/2 to 66 1/2, while DLJ was sinking 2 1/2, or 5%, to 40 5/16.

In other PaineWebber news, the Heard on the Street column in the

Journal

reports that as part of a criminal inquiry into pension fund investments made by the former Connecticut state treasurer, Paul Silvester, federal prosecutors are looking into PaineWebber's activities in the state. The paper cited people familiar with the matter.

Raytheon

(RTN.B)

was tumbling 15/16 to 23 5/16 after Lehman Brothers cut its fiscal 1999 estimate to $2.70 a share from $3.50, while Donaldson Lufkin & Jenrette sliced its rating to market perform from buy.

Vitria Technology

(VITR)

was advancing 2 15/16 to 57 3/16 after Merrill Lynch rolled out coverage of the stock at near-term accumulate and long-term buy.

Ziff-Davis

(ZD)

unit

ZDNet

(ZDZ)

was climbing 3 1/8, or 15.6%, to 23 1/8 after Goldman Sachs upped its rating to trading buy from market outperformer.

Miscellany

Philips Realty

(PHR) - Get Report

was adding 3/4 to 16 3/8 after it said it hired Prudential Securities to weigh strategic options for the company.