To all-Today's market--fear Asian crisis isn't over, worries on some earnings and concern over dollar rally caused today's downdraft. Tellabs is currently only connected in a minor way to asian crisis,it's earnings are different than other tech. stocks,eg. Netscape made only $8000 last quarter.
May 26, 1998
NEW YORK (CNNfn) - A sudden steep climb in
the dollar against the Japanese yen Tuesday
heightened worries that the Asian crisis is far from
over and sent investors running for cover and
dumping stocks along the way.
Fearing that the strong dollar is a signal that the
Pacific Rim's troubles will last longer and run
deeper than had been expected, many opted to
seek a safer investment in bonds. Others, worried
that the rising greenback would hurt the bottom
lines of large multinational corporations, simply ran
for the exits.
"If the Asian crisis deepens, that simply means
that corporate profits are going to suffer," said
Peter Cardillo, stock market strategist at Westfalia
Investments.
Although his long-term outlook for the market
remains positive, Cardillo warned that a sudden
sharp correction, taking the Dow industrials down
by as much as 10 percent, is likely in the very near
future. (818K WAV) or (818K AIFF)
The Dow Jones industrial average fell 150.71
points, or 1.65 percent, to 8,963.73. Declining
issues led advances 2,234 to 829 as trading volume
on the New York Stock Exchange reached 535
million shares.
Trading was unusually light, with many investors
still absent from the market after a long holiday
weekend, and others opting to remain on the
sidelines while contemplating the summer outlook
for stocks.
The Nasdaq Composite lost 26.91, or 1.49
percent, to 1,778.09 and the S&P 500 index shed
16.45, or 1.48 percent, to 1,094.02. (Look here
for the performance of widely held stocks.)
The bond market rallied on the dollar's strength
against the yen. Lower commodity prices, as
measured by the Commodity Research Bureau's
index and signaling tame inflation, also helped. The
benchmark 30-year Treasury bond rose 28/32 of a
point in price, lowering the yield to 5.84 percent.
The dollar climbed to its highest level against the
yen in seven years as a much-expected Bank of
Japan intervention failed to materialize over the
weekend. The U.S. currency got its biggest support
from a U.S. News & World Report article, which
suggested Treasury Secretary Robert Rubin would
tolerate a climb in the dollar to 140, or even 150
yen, to help Japan's stagnant economy. Although
Rubin later expressed surprise at the story, the
dollar remained strong, closing at 137.85 yen.
Blue chips, techs take a hit
In stocks, financial blue chips tumbled as
concerns about their overseas earnings mounted
amid the sharply higher dollar and the festering
turmoil in Asia. Dow component J.P. Morgan
(JPM) lost 2-3/4 to 130-1/16 and Chase
Manhattan (CMB) shed 5-5/16 to 139-1/8.
Shares of Walt Disney (DIS) lost 4-9/16 to
111-3/4 amid concerns about the summer movie
season after "Godzilla" from rival movie maker
Sony reaped smaller-than-expected revenues over
the key Memorial Day weekend. Disney's own
summer blockbuster "Armageddon" opens later in
the season.
Technology heavyweights also sank in the
overall meltdown, hurt by speculation that their
Asian exposure would bite a chunk off future
earnings. Microsoft (MSFT) dropped 1-15/16 to
83-5/8. Dow member IBM (IBM) lost 15/16 to
121.
And shares of Diebold (DBD) plunged 8-7/8 to
30-7/8 when the company warned its
second-quarter results would fall short of
expectations. Diebold provides card-based
transaction systems to financial and health-care
businesses.
Among the day's other newsmakers, T R
Financial (ROSE) jumped 5, or almost 13
percent, to 43-5/8 on news the company will be
acquired by Roslyn Bancorp (RSLN) in a $1.1
billion stock swap. T R Financial was the leading
net gainer on the Nasdaq, while Roslyn fell 4-1/16
to 23-9/16.
In another deal, U.S. Surgical (USS) inched
down 9/16 to 38-11/16 on news Tyco
International (TYC) is buying the maker of
disposable medical sutures and staples for $3.3
billion in stock. The deal further increases Tyco's
share in the medical supply market, which has been
growing steadily with 80 acquisitions over the past
five years. Tyco's stock fell 1-15/16 to 53-3/4.
Arbor Software (ARSW) tumbled 8-1/4, or
over 19 percent, to 33-7/8 on news the company is
merging with rival Hyperion Software (HYSW) to
create a new company: Hyperion Solutions.
Hyperion's shares slipped 6-3/4, or more than 17
percent, to 31-3/8.
And shares of Pulitzer Publishing (PTZ) fell
2-3/4 to 87-1/4 after the company said Monday it
will merge its broadcasting business into
Hearst-Argyle Television (HATV) and spin off
its publishing and new media operations into a new
publicly traded company called Pulitzer.
Finally, shares of Chrysler (C) were the most
active stock on the Big Board, rising 7/8 to 54-3/4
in tandem with gains in Daimler-Benz (DAI), the
German conglomerate that is buying Chrysler in the
biggest industrial merger of all time. Daimler's
American depositary receipts rose 1-13/16 to
96-1/8.
-- by staff writer Malina Poshtova Zang
Once again a light market with some news that has little to do with Tellab's affects stock price by default.
Dave Dickerson |
