Dow plummets
83 points

The technology-laden Nasdaq
stock market flirted with disaster

Star-Bulletin news services

NEW YORK - Stocks tumbled sharply today as investor jitters about weak corporate profits were aggravated by dire outlooks from leading companies in the computer and health care industries.

The Dow Jones industrial average fell 83.11 points, nearly 1.5 percent, to close at 5,520.54. The blue-chip index earlier in the day had plunged as low as 133 points to fall below 5,500 for the first time since early May.

Today's drop followed a 115-point drop Friday. The Dow has lost nearly 5 percent off the high of 5,778 it set May 22 - a 258-point decline.

"A great deal of damage has been done, and it is going to take a great period of time to rebuild," said Ralph Bloch, chief market analyst at Raymond James & Associates in St. Petersburg, Fla. "For the first time since December 1994, when this run really got going, people are showing bad losses in their holdings."

The technology-laden Nasdaq stock market flirted with its worst day since the stock market crash of October 1987.

"There's been a real disturbance in the Nasdaq," said David Shulman, market strategist at Salomon Brothers. "It started with the smaller technology names, but now it's spread to the bigger technology names, including some of the ones that were previously invulnerable."

Investors' recent concerns over disappointing second-quarter corporate profits intensified after reports by Hewlett-Packard Co. and United Healthcare Corp. that business hasn't been as robust as expected. The downbeat assessments hurt shares in many computer and health companies.

The Nasdaq composite index has fallen 142 points in less than five weeks, and has lost nearly 11 percent off its high of 1,249, it's closing mark on June 5. The index was down 46.70 at one point this afternoon, which would have exceeded the index's biggest one-day point drop for a full session - a 46.12-point plunge in Oct. 19, 1987.

However, the Nasdaq index recovered somewhat to close down 34.58 points, or 3 percent, at 1,106.61.

Other broad market measures fell sharply too, but improved from the day's lows as investors searched for bargains.

The New York Stock Exchange's index fell 5.11 to 346.64; the Standard & Poor's 500-stock index dropped 10.39 to 645.67; and the American Stock Exchange index fell 12.72 to 549.09.

Among NYSE issues, decliners led advancers by nearly four to one, with 529 up, 2,021 down, and 643 were unchanged. NYSE volume totaled 516.46 million shares, vs. 421.31 million yesterday.

Shares of Hewlett-Packard plummeted $10.62-1/2 to $78.37-1/2. H-P said orders have slowed for many of its products and that it will quit the disk-drive business.

That caused shares of other high-technology companies such as Compaq Computer Corp. and America Online Inc. to decline.

United Healthcare shares sank $13.25 to $31 after it said earnings wouldn't meet analysts' forecasts. Health stocks suffered as a result.

Investors selling shares looked for safety in the bond market. U.S. bonds were little changed as investors pondered whether the Federal Reserve will raise interest rates. The benchmark 30-year Treasury bond rose 1/4 point, or $2.50 per $1,000 bond, yielding 7.05 percent.

Bloomberg Business News and
the Associated Press contributed to this report.

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