Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Thu, Apr 9 1992 Date: Thu, 9 Apr 92 05:44:24 EDT Message-ID: 04-09 0000 DECISIONLINE: Personal Investing USA TODAY Update April 9, 1992 Source: USA TODAY:Gannett National Information Network STOCKS DOWN SHARPLY: U.S. stocks tumbled for the second straight session Wednesday, reacting to a severe drop in the Japanese stock market. The Dow Jones industrial average closed down 32.20 points at 3181.35. Tuesday the Dow dropped 61.94 points. The first three days this week, the Tokyo Stock Exchange's Nikkei average of 225 stocks had dropped 1,384.82 points (7.5%) to 17,175.53. BAD EARNINGS NEWS HURTS STOCKS: Companies are paying the price when their earnings don't live up to expectations. This week, Wall Street is ripping apart stocks of companies whose earnings have stumbled. Investors razed Teledyne's stock Wednesday when it said first-quarter earnings were 16 cents per share. Analysts expected 38 cents per share. Its shares plummeted 4 5:8 to $22 3:4. (For more, see special Earnings package below.) DR PEPPER:SEVEN-UP GOING PUBLIC: Dr Pepper:Seven-Up said Wednesday that it will sell common stock to the public for the first time. Though company officials wouldn't comment on the offering's size, American Banker says the company hopes to raise about $600 million to pay debt estimated at about $1 billion. Dr Pepper:Seven-Up says it will file the offering with the Securities and Exchange Commission in the next two weeks. SMALL STOCKS' DROP NOT SO BAD: The recent decline in small stocks may not be as bad as it seems. After soaring 98% from October 1990 to February, the NASDAQ over-the-counter composite has fallen 11% since. Small stock tracker Claudia Mott notes that the index's biggest 100 stocks of a total 4,200 account for 40% of its movement. Recent weakness in such big names as Microsoft, Amgen and Immunex have hurt the index. RUSSEL 2000 IS BETTER BAROMETER: Analyst Claudia Mott says the Russell 2000 offers a better picture of how small stocks are performing because it focuses on smaller companies and is less skewed by big moves in a few big stocks. The Russell index rose 78% from October 1990 to February of this year. It's lost 9% since its Feb. 12 peak - including 1.5% Wednesday. But, like the Dow, it is up a bit for the year. SCIMED'S BALLOON BURSTS: Shares of SciMed Life Systems, the maker of inflatable catheters used to open blocked arteries, fell 8 1:4 to $58 3:4 in heavy trading Wednesday after a sobering earnings report. Scimed reported net income of 81 cents a share for the quarter that ended Feb. 29. That was near Wall Street's estimated 85 cents to 90 cents. But growth-fund managers, the dominant shareholders, sold in earnest. GOLD DOWN IN USA: Gold prices sagged in U.S. trading after moving higher on European precious metals markets. On the New York Commodity Exchange, gold for current delivery closed at $337.90 a troy ounce, down from Tuesday's settlement of $338.70. Republic National Bank in New York quoted an ounce of gold bullion at $337.55, 75 cents lower than late Tuesday. SPECIAL PACKAGE ON EARNINGS: ECONOMY HAVING AN EFFECT: Investors have been buying stocks whose earnings would rise when the economy recovers, says Marshall Front, market strategist for SteinRoe mutual funds. Lower earnings on those stocks indicates the recovery hasn't started yet and that the stocks' prices aren't likely to improve soon, he says. So investors burn the stocks. RATES ARE `PRESSURING' MARKET: Wall Street could overlook poor earnings in December and January, when falling interest rates were attracting attention, says fund manager Beth Cotner. But rates have risen. The yield on the key 30-year Treasury bond was 7.9% Wednesday, vs. 7.4% in January. "Rates are pressuring the stock market, and you can't compound that with disappointing earnings," says Cotner. BIG RISERS ARE MOST VULNERABLE: Stocks in the Standard & Poor's 500 index sell for 25 times their latest 12-month earnings, says Ken Heebner of CGM Mutual fund. "When stock prices are extremely high, it doesn't take much to knock them down," he says. Stocks that rocketed earlier this year or last year are most vulnerable to earnings-induced crashes, says Frank Cappiello of McCullough, Andrews & Cappiello. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Thursday at 3181.35, after closing down 32.20 Wednesday. The New York Stock Exchange composite opens at 217.92, down 2.08. The American Stock Exchange market value opens at 380.90, down 4.48. The NASDAQ OTC composite opens at 573.68, down 7.93. DOLLAR OPENS MIXED OVERSEAS: The dollar opens mixed on foreign markets Thursday. It opens at 0.5722 British pounds, up from 0.5716; 5.5018 French francs, down from 5.5125; 132.77 Japanese yen, down from 133.00; and 1.6260 German marks, up from 1.6240. (As of 3 p.m. Wednesday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM