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Bad news bruises Dow
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January 23, 1998: 5:59 p.m. ET
Corporate profits, Asia and a White House scandal derail markets
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NEW YORK (CNNfn) - Stocks finished lower Friday as concerns about earnings of U.S. companies, a lingering financial crisis in Asia and a growing scandal in Washington caused broad-based selling on Wall Street for the third day in a row.
The Dow Jones industrial average lost 30.14 points to close at 7,700.74. The blue chip index finished the week 52.81 points, or 0.68 percent, lower and is off 2.62 percent on the year.
On the New York Stock Exchange, declines trounced advances, 1,859 to 1,080, as 633 million shares changed hands. (Look here for the performance of widely held stocks.)
The Nasdaq Composite finished almost flat, losing only 0.58 points to 1,575.93. But the index ended the week 13.07 points, or 0.84 percent, higher and is up 0.36 percent on the year.
The broader S&P 500 index closed 5.46 lower to at 957.58. The index is down 0.41 percent on the week and 1.32 percent on the year.
Weakness in bonds and the dollar
Bonds tumbled, pressured by weakness in the dollar. The price of the benchmark 30-year Treasury bond plunged 1-9/32, raising the yield to 5.95 percent, the highest closing so far this year.
A flood of new supply expected to hit the market in the weeks to come also weighed on prices. The Treasury Department is scheduled to sell $15 billion in two-year notes Jan. 27 and $11 billion in five-year notes a day later. The department also will carry out its quarterly refunding in February although the amount has not been announced yet.
The dollar fell to a two-month low against the Japanese yen, extending its sharp overnight declines amid speculation that Tokyo was working on measures to stop the yen's recent slide. The dollar also weakened sharply against the German mark.
Both bonds and the dollar were under pressure from uncertainty surrounding the latest allegations of misconduct against President Clinton. But Charles Crane, a stock analyst at Key Asset Management, said it was high valuations, more than Clinton's legal troubles, that would pressure equities in the longer term. (397K WAV) or (397K AIFF)
Weakness in the dollar prompted heavy buying of gold, which hit its highest level in two months. February gold futures on the Comex closed at $300.30, up $9.00.
Asian fears rise again
In stocks, investors dealt with renewed concerns over the impact of Asia on U.S. companies while digesting a new dose of earnings reports from high-profile companies.
Fears that the Pacific Rim's economic woes would hurt the performance of American corporations hit shares of financial services companies. Dow component J.P. Morgan (JPM) lost 3-9/16 to 99-5/16, Citicorp (CCI) was down 1-13/16 to 113-1/8, Chase Manhattan [CMB} fell 1 to 103-1/4 and Wells Fargo (WFC) slid 2-1/16 to 300-7/8.
In the high-tech sector, Iomega (IOM) shares lost 3/32 to 8-15/16 - and were the most actively traded on the Big Board - after the computer storage company reported fourth-quarter earnings of 13 cents per diluted share. That was up from a year earlier but 2 cents short of Wall Street expectations. Iomega noted that slow demand from Asia hurt results.
Chrysler Corp. (C) shares also faired poorly after the car maker said it earned $852 million, or $1.28 per diluted share, in the fourth quarter, up from $807 million, or $1.12 a share, a year earlier. The company's 1997 results included a $60 million gain from the initial public offering of its rental car unit, Dollar Thrifty Rental Automotive Group (DTAG). Chrysler beat Wall Street earnings estimates of $1.12 a share, but its stock still fell 11/16 to 33-1/2.
However, shares of Xerox Corp. (XRX) surged 4-5/8 to 76-3/4 after the office equipment maker reported fourth-quarter profits of $1.46 per diluted share, beating market estimates of $1.41 per share.
Gateway 2000 (GTW) was also a big winner, rising 3-1/8 to 37-1/8 after the computer maker posted fourth-quarter results sharply above Wall Street expectations. Gateway earned $93 million, or 59 cents per diluted share, well above estimates of 45 cents a share. Separately, Gateway named Jeffrey Weitzen, a former AT&T executive, to be its president and chief operating officer.
Meanwhile, Silicon Graphics (SGI) shares rose 2-7/16 to 13-11/16 after the company announced a restructuring program and named Richard Belluzzo as its chairman and chief executive officer. Late Thursday, Silicon Graphics reported a fourth-quarter profit of less than a penny per share, excluding restructuring and acquisition-related charges. Wall Street expectations for the latest quarter were for a profit of 7 cents a share.
Also in the technology sector, shares of BMC Software (BMCS) jumped 4-1/2 to 68-1/2 after the company posted strong third-quarter earnings. BMC earned 60 cents per diluted share in the third quarter of fiscal 1998, up from 45 cents a year earlier.
--by staff writer Malina Poshtova Zang
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