Abreast of the Market
Citigroup, Colgate-Palmolive Fall
On Concerns About Brazil's Woes
By Robert O'Brien
01/14/99
The Wall Street Journal
NEW YORK -- Worries about more setbacks in Brazil's progress from economic distress sent shares of U.S. banking and consumer stocks lower in a volatile, actively traded session yesterday.
Shares of Citigroup lost 3 9/16 to 52 3/16, while Chase Manhattan declined 2 1/4 to 71 5/8 and J.P. Morgan surrendered 5 1/4 to 106 9/16. Bank stocks' declines rivaled the setbacks experienced over the summer, when worries about the economic disarray in Latin America and Russia first raised concerns about trading losses and loan exposure in those parts of the globe.
Multinational consumer issues also finished lower. Gillette dropped 2 3/4 to 52 1/4. Colgate-Palmolive, which Donaldson, Lufkin & Jenrette downgraded in the session, sank 6 1/8 to 78 3/8.
Market watchers said the latest sell-off yesterday was unwarranted. U.S. banks and brokers have been through this before, and weren't likely to face the same exposure they did last summer. "This may well be the end of the emerging-market crisis," Joseph Battipaglia, chief market strategist for Gruntal, said.
Nevertheless, market averages finished sharply lower, as the "momentum" investors who have driven stocks mostly higher here in 1999 abandoned the market with a singular ferocity in the early going.
The Dow Jones Industrial Average ended 125.12 points lower, a drop of 1.32%, to 9349.56, or about midway between its opening level and its low, when it was off 261.58 points. That low took place in the first half hour of the trading day.
Declining issues had a large advantage over advancing ones on the New York Stock Exchange, with 2,119 losers to 1,026 winners. Big Board share volume totaled 929.9 million, the 10th-heaviest day ever, compared with 789.4 million Tuesday.
The dominant role that momentum traders have come to play in the market played havoc with technology stocks, though by the end of the session many of these stocks partially recovered.
The Nasdaq Composite Index finished with a decline of just 3.94, or 0.17%, at 2316.81, despite suffering a loss of as much as 114.56 points at its intraday low.
Individual technology issues reflected the extremes. Shares of Yahoo! (Nasdaq) traded as low as 332 a share and as high as 406. Shares closed 34 points down at 368.
Shares of uBid (Nasdaq) posted a similarly dynamic session, trading as low as 62 1/2 and as high as 101 1/2 before ending 12 5/16 lower at 88 1/16.
But overall, the tech sector was able to make a little progress, thanks to strong profit performances by several bellwether issues.
Shares of Intel rallied 3 7/16 to 139 on Nasdaq. Late Tuesday the chip maker posted fourth-quarter profits that were stronger than what Wall Street was anticipating. Integrated-circuit maker Linear Technology surged 12 3/16 to 99 13/16, reaching a 52-week high on Nasdaq, after its fiscal second-quarter numbers, also out late Tuesday, outstripped analysts' forecasts.
Those results fanned hopes that other chip stocks would put up compelling quarterly results. Shares of Motorola moved ahead 3 3/8 to 70 7/8, while Texas Instruments gained 1 1/4 to 93 1/2, and Micron Technology improved 1 1/8 to 71 3/8.
Sun Microsystems (Nasdaq) advanced 3 7/16 to 96 13/16, after Morgan Stanley Dean Witter raised its rating and 12-month price target on the stock.
The Standard & Poor's 500-stock index suffered a setback of 5.11, or 0.41%, to 1234.40.
A handful of drug stocks were able to make some progress, as investors sought stocks in groups that traditionally have lived up to earnings expectations.
Shares of Pfizer, for example, increased 3 to 116 11/16. Eli Lilly gained 4 3/16 to 80 11/16. The Indianapolis drug maker said that Tuesday a U.S. court issued a ruling that reduced the number of issues to be decided in two patent lawsuits filed by Barr Laboratories and Geneva Pharmaceuticals. Shares of Barr, a Pomona, N.Y., drug developer, slid 4 5/16 to 42 1/4. Barr said it was disappointed the court dismissed those claims.
Meanwhile, several U.S. stocks fell on spillover of the worries about lingering weakness in Latin America's economies. General Motors dropped 1 5/16 to 81 11/16; Ford Motor lost 1 1/2 to 61 3/8.
Among consumer stocks, Avon Products lost 2 1/16 to 39 7/16, Bestfoods fell 13/16 to 50 1/8, and Clorox sank 3 1/2 to 109 7/16.
Shares of Georgia-Pacific lost 3 7/8 to 64, after Morgan Stanley lowered its rating on the stock. Bowater, which Morgan Stanley also downgraded, declined 1 1/16 to 42 13/16. Caterpillar, the farming-equipment maker, suffered a setback of 2 9/16 to 48 1/16. Deere lost 1 1/2 to 34 3/4.
Brokerage-company stocks were hard hit on worries that the group would face more trading losses on emerging-market securities. Merrill Lynch fell 3 9/16 to 69 7/16, and Lehman Brothers gave up 3 7/16 to 48 9/16.
AES tumbled 4 1/16 to 38 15/16, reflecting the Arlington, Va., power company's exposure to Brazil. The company, which operates power plants around the globe, owns parts of three utilities in Brazil.
Overall, utility stocks were little changed. The Dow Jones Utility Average slipped 0.51, or 0.17%, to close at 308.07.
Lucent Technologies dropped 3 5/8 to 104 1/4. Ascend Communications said it accepted the telecommunications-equipment maker's buyout offer of more than $19 billion worth of stock. Shares of Ascend leapt 5 3/8 to 80 5/16 on Nasdaq.
Bell Atlantic advanced 1 3/16 to 54 15/16. The telecommunications-service provider signed an agreement with America Online to provide high-speed digital subscriber line access to the online-services provider. AOL fell 7 7/8 to 145 3/4 in a mixed session for online stocks.
Walt Disney fell 1 7/8 to 36 1/8. Merrill Lynch lowered its earnings estimate for the entertainment and broadcasting giant, citing weakness in sales of its videos and merchandise.
AtHome jumped 5 3/4 to 105 3/4 on Nasdaq. Prudential Securities raised its rating on the stock of the Redwood City, Calif., provider of online services.
Visx leapt 15 3/16 to 116 5/8 on Nasdaq. The Santa Clara, Calif., developer of laser technology late Tuesday issued an encouraging fourth-quarter earnings outlook. Warburg Dillon Read boosted its price target on the stock.
Unocal lost 1 5/8 to 30 15/16. The El Segundo, Calif., energy-resource and project-development concern said Tuesday it will sell its 75% working interest in a geothermal steam venture to Calpine, which owns the other 25%. Terms weren't disclosed.
Shares of Calpine, a San Jose, Calif., energy company, slipped 1/8 to 28 5/8.
LVMH Moet Hennessy Louis Vuitton's American depositary receipts lost 2 1/8 to 45 3/8 on Nasdaq. Officials of the Dutch luxury-goods maker acknowledged the company amassed a stake of at least 15% in Italian fashion house Gucci Group, but the Dutch company said it doesn't plan to take over Gucci currently. Last week, LVMH disclosed that it acquired a stake of more than 5% in Gucci.
Gucci slipped 1/16 to 70.
Dow Chemical fell 2 7/16 to 91 13/16. The Midland, Mich., chemicals and plastics maker is planning a $700 million cost-reduction program over the next two years, according to an official of the company's unit in Canada.
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Busiest Days
Top 10 NYSE volume days of all time
NO. SHARES
RANK DATE (millions)
1 Sept. 1, 1998 1,204.9
2 Oct. 28, 1997 1,195.8
3 Oct. 8, 1998 1,109.5
4 Oct. 16, 1998 1,019.6
5 Jan. 6, 1999 986.9
6 Oct. 7, 1998 964.5
7 Oct. 20, 1998 947.5
8 Aug. 27, 1998 934.7
9 Jan. 8, 1999 934.0
10 Jan. 13, 1999 929.9
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Source: WSJ Statistics
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