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Big sell-off is led by Big Blue and banks 'Sobriety' is returning, says one money manager of Dow's 216-point slump


NEW YORK -- U.S. stocks suffered their worst decline in two months, led by computer makers such as International Business Machines Corp. and financial companies, as investors scaled back their expectations for fourth-quarter profits.

"Earnings expectations for 1999 are too high," and "sobriety" is returning, said Henry Herrmann, president of Waddell & Reed Financial Inc., which oversees $26 billion.

The Dow Jones industrial average fell 216.53, or 2.3 percent, to 9,116.55. IBM, down $4.875, to $165.125, accounted for one-tenth of the average's decline.

The Standard & Poor's 500 index declined 28.66, or 2.4 percent, to 1,163.63. The Nasdaq composite index, packed with computer-related shares, fell 66.90, or 3.3 percent, to 1,949.54.

Among other broad market indexes, the Russell 2,000 index of small-capitalization stocks slipped 4.34, to 397.75; the Wilshire 5,000 index shed 250.19, to 10,650.20; the American Stock Exchange composite index lost 10.34, to 663.58; and the S&P; 400 midcap index dropped 9.39, to 350.35.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, fell 2.21, to 191.36, led by MedImmune Inc, off $5.2188, to $66.875, and Lockheed Martin Corp., down $2.4375, to $103.75.

Analysts expect earnings of companies within the S&P; 500 to increase 5.7 percent in the fourth quarter, down from 9.0 percent at the beginning of October, according to First Call Corp.

Stocks rose to records last week, after staging the second-fastest recovery from a bear market since World War II.

In November, the Dow industrials gained 6.1 percent. The S&P; 500 gained 5.9 percent, and the Nasdaq composite rose 10.1 percent.

Nearly 686 million shares changed hands on the Big Board yesterday, down from the three-month average of 763 million shares. Even as the market declined, 238 companies reached 52-week highs, while 183 fell to new lows in composite trading.

"Investors are selling some of the biggest gainers," said Scotty George, chief investment strategist at Corinthian Partners Asset Management.

Dell Computer Corp. fell $3, to $60.8125, after almost tripling this year, and EMC Corp. declined $2.50, to $72.50, having more than doubled this year.

Internet-related companies, the most actively traded stocks, plunged as investors concluded that even strong holiday sales will leave them without profit. Inc., which had more than doubled in the previous three sessions, fell $6.125, to $25.50, and was the second-most active stock in composite trading. Egghead operates three retail World Wide Web sites. Inc., the biggest seller of books and music over the Internet, fell $24.625, to $192. Onsale Inc., a Web auctioneer, fell $36.125, to $61.50.

Bank One Corp. fell $2.125, to $51.50; U.S. Bancorp slipped $1.125, to $37; and Wells Fargo Co. fell $1.1875, to $36.125.

Oil companies fell as oil prices slumped to a 12-year low.

Pub Date: 12/01/98

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