Dow falls to 6-month low Industrial average drops 34 points, to 8,425, paring '98 gain to 6.5%


NEW YORK -- U.S. stocks fell yesterday on concern that share prices are higher than justified because of a dimming outlook for corporate profits. Telecommunications equipment makers led the drop, after Ciena Corp. warned that increasing competition will result in disappointing earnings.

The Dow Jones industrial average fell 34.50 to 8,425.00, its lowest close since Feb. 24. The Standard & Poor's 500 index fell 12.16 to 1,062.75. The Nasdaq composite index lost 12.35 to 1,790.19.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks slid 1.04 to 402.79; the Wilshire 5,000 index lost 90.05 to 9,913.77; the American Stock Exchange composite index fell 5.14 to 662.64; and the S&P; 400 midcap index dropped 1.89 to 329.85.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, fell 2.52 to 204.42.

About four stocks fell for every three that rose on the New York Stock Exchange, and 634 million shares changed hands, about average for the past three months.

The Dow 30 fell 2.0 percent for the week. On July 17, the Dow had a year-to-date gain of 18 percent; it's now down to 6.5 percent. The S&P; 500 lost 2.5 percent for the week and the Nasdaq dropped 3.1 percent.

Ciena, the biggest maker of equipment to increase capacity on phone networks, tumbled $17.0625 to $54.125 after warning that third-quarter profit will be less than half what analysts expected. The outlook raises questions about Ciena's pending $6.86 billion sale to Tellabs, announced June 3. Tellabs sank $13.6875 to $58.125.

Rival Lucent Technologies Inc. dropped $2.1875 to $85.875, and Ascend Communications Inc. fell $2.1875 to $46.1875.

UAL Corp. rose $3.5625 to $69.1875, gaining for the first time this week, after the parent of United Airlines reiterated its expectation for growth in third-quarter and 1998 earnings.

Tele-Communications Inc. fell $1.8125 to $36.4375 after the No. 2 RTC U.S. cable company said it will spend more in the third quarter to upgrade its network, and expects to lose some subscribers. AT&T; Corp., which agreed to buy TCI, fell $1.9375 to $55.375, leading the Dow's decline.

Dow Chemical Co., Lyondell Chemical Co. and Rohm & Haas Co. fell in the wake of DuPont Co.'s warning that third-quarter earnings will be below year-earlier levels. DuPont fell $1.75 to $53.25; Dow Chemical fell $4.625 to $85.50; Rohm & Haas dropped $4.50 to $90; and Lyondell slipped $1.875 to $22.9375.

J. P. Morgan & Co. surged $9.625 to $126.875, mitigating the Dow's losses, after Business Week fueled speculation that the financial services firm is in talks to be acquired for $30 billion by Deutsche Bank AG, Germany's second-largest bank.

Stryker Corp. fell $5.75 to $36 after the company said it will buy Pfizer Inc.'s Howmedica orthopedics unit for $1.9 billion, expanding its products to repair injured joints and bones. Stryker said the acquisition won't add to earnings until 2000, and the company will take a $400 million pretax charge in the fourth quarter for the purchase.

EVI Weatherford Inc. slumped $4 to $19 after the fifth-largest oil field services and equipment company in the United States said it will miss current third-quarter and 1998 earnings estimates by a small margin as lower oil prices cut demand.

Global Crossing Ltd. rose $6.50 to $25.50 trading yesterday in its first day of trading on the Nasdaq stock market. The company is laying fiber-optic cables under the Atlantic and Pacific oceans.

24/7 Media Inc., another IPO, rose $6.25 to $20.25. The company runs advertising networks for independent Web sites that let advertisers place their ads on all of these sites through a single purchase.

Pub Date: 8/15/98

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