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Stocks fall in advance of Fed report


NEW YORK -- U.S. stocks fell yesterday for the first time in five days as a decline in bank shares offset a rally in chemical issues.

The Dow Jones industrial average, which fell 7.12, to 3,748.31, traded within 13.92 points of Monday's close, the narrowest range this year.

Investors were reluctant to make any big bets before today, traders said, when Fed Chairman Alan Greenspan gives Congress the Fed's assessment of the U.S. economy in his twice-yearly Humphrey-Hawkins testimony.

"It's basically a wait-and-see market right now," said Jack Bayer, managing director of Nasdaq trading at Oppenheimer & Co.

Within the Dow industrials, de clines in shares of Eastman Kodak Co. and International Business Ma chines Corp. offset gains in General Electric Co., Goodyear Tire & Rubber Co. and United Technologies Corp.

General Electric rose $1, to $48.875, after it reported second-quarter net income rose to 89 cents a share from 78 cents a year earlier. The results exceeded analysts' estimates by a penny, according to Zacks Investment Research.

Among broader market indexes, the Standard & Poor's 500 Index declined 1.36, to 453.86, as shares of banks and semiconductor makers fell. The Nasdaq Composite Index fell 3.30, to 719.32, as shares of Intel Corp. sagged $1.625, to $57.

Trading was sluggish, with just 251.54 million shares trading hands by the close of trading on the New York Stock Exchange. About ten stocks fell for every nine that rose on the Big Board.

Better-than-expected earnings at Citicorp, Chemical Banking Corp. and Chase Manhattan Corp. failed to spark a rally in bank stocks. Analysts expressed concern that the higher earnings were largely the result of lower loan-loss reserves and cost-cutting rather than increased loan demand.

"The market doesn't care about loan-loss provisions -- the market cares about revenue," said Raphael Soifer, an analyst with Brown Bros. Harriman & Co.

Citicorp, the nation's largest banking company, said net income rose to $1.83 per share, up from 88 cents a year ago, and well above the $1.28-a-share mean forecast of analysts polled by Zacks. The stock fell $1.25, to $40.75. Chase shares plunged $2.375, to $36.375. Late Monday, the banking company's chief financial officer told analysts the banking company's net interest revenue is under pressure because of increased competition in its key mortgage and credit-card businesses.

Technology stocks also dropped as Intel, the world's largest independent manufacturer of semiconductors, reported earnings that matched analysts' estimates. Intel said second-quarter profits rose to $1.46 per share, up from $1.30 per share last year.

"Just matching the numbers isn't good enough for people interested in growth stocks," said Art Bonnell, president of the Bonnell Growth Fund. Intel's decline cut one point off the Nasdaq 100 Stock Index.

Analysts and investors point out that though the company's earnings rose 12 percent over the year, gross margins fell to 58.3 percent from 64 percent at the end of last year's second quarter.

The decline in bank and technology stocks partly offset a rally in shares of chemical makers, which gained after Rohm & Haas Co. and Praxair Inc. reported earnings that exceeded expectations.

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