Stocks fell in a seesaw session yesterday after Minnesota Mining & Manufacturing Co. became the 10th member of the Dow Jones industrial average to warn that earnings would not meet expectations.
Exxon Corp. and other oil shares gained as a military strike against Iraq, launched after exchanges closed, threatened to disrupt the flow of oil from the Middle East. The market pared losses on the prospect that the attack would delay a congressional vote on whether to impeach President Clinton.
The Dow industrials fell 32.70, or 0.4 percent, to 8,790.60, falling back in late trading after erasing an 82-point drop. The Standard & Poor's 500 index dropped 0.89, or 0.1 percent, to 1,161.94. The Nasdaq composite index lost 3.24, or 0.2 percent, to 2,009.36. Declining stocks outnumbered advancers by a 16-to-15 ratio on the New York Stock Exchange.
Among other broad market indexes, the Russell 2,000 index of small-capitalization stocks rose 0.28, to 389.85; the Wilshire 5,000 index gained 1.55, to 10,592.83; the American Stock Exchange composite index climbed 5.33, to 651.44; and the S&P; 400 midcap index added 0.69, to 347.95. The Sun-Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, fell 0.44, to 187.26.
The market fell at the end of the day because Wall Street trading desks wanted to own as little stock as possible overnight, given the uncertainty of what might happen with Iraq or impeachment, said Paul L. Hennessey, head of trading at Boston Partners Asset Management LP, which oversees $17 billion.
News on Iraq or Clinton "could throw the market in either direction at any time," Hennessey said.
Seventy minutes after the market closed, the White House confirmed that a "substantial military strike" against Iraq had been ordered. The attack will prompt the House of Representatives to delay voting on whether to impeach Clinton over his efforts to conceal his relationship with a former intern.
The market "is looking favorably" on the prospect of a delay of the impeachment vote, said Joseph DeMarco, head trader at HSBC Asset Management Americas Inc.
Manufacturing shares including 3M, Caterpillar Inc. and Union Carbide Corp. have slumped as the worldwide economic slowdown has cut demand, pushed prices down and led to a stream of imports into the United States, where the economy remains strong.
3M fell $2.375, to $71.375, after saying that it expects to earn about 80 cents a share in the fourth quarter, well below the average estimate of 96 cents in a First Call survey. 3M said currency fluctuations will cut earnings by about six cents a share. 3M also warned that 1999 profit will fall short of expectations.
Caterpillar dropped $3.0625, to $41.375, its seventh straight loss. The largest maker of construction equipment said Tuesday that its earnings would fall short of estimates, partly because of weak economies in Asia and Latin America.
In addition to 3M and Caterpillar, eight other companies in the Dow industrials have warned of disappointing profit in the fourth quarter or 1999: Union Carbide, Boeing Co., Merck & Co., Sears, Roebuck & Co., Coca-Cola Co., J. P. Morgan & Co., Chevron Corp. and Hewlett-Packard Co.
Crude oil prices rose 7 percent on the New York Mercantile Exchange, their biggest rise in six months. Exxon Corp. rose $1.5625, to $75.5625, Mobil Corp. rose $1.1875, to $89.625, and Unocal Corp. gained $1.125, to $31.1875.
Higher oil prices could mean an increase in production, and that prospect boosted shares of companies that provide services or equipment for crude production.
R & B Falcon Corp. gained $1.5625, to $9.875, Noble Drilling Corp. jumped $1.5625, to $14.625, and Schlumberger Ltd. rallied $2.8125, to $46.6875. The Philadelphia Stock Exchange oil service sector index jumped 8.9 percent.
Defense stocks gained. Lockheed Martin Corp. rose $1.375, to $95, and Northrop Corp. climbed $2.8125, to $73.4375.
Internet shares also gained. Amazon.com Inc. soared $46.25, to a record $289. America Online Inc. rose $3.4375, to $96.1875, Yahoo! Inc. rose $7.125, to $205.125, and eBay Inc., an online auctioneer, rose $29.50, to $223.50.
Pub Date: 12/17/98