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Archive for Wednesday, October 18, 2000

Stocks drop on Intel concerns

Chipmaker’s third-quarter earnings beat analysts predictions

October 18, 2000

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— Investors' heightened anxiety Tuesday about Intel's impending earnings report drove stock prices to their lowest levels in months. The chip maker's results turned out to be better than expected but not strong enough to set off a rally in after-hours trading.

Intel held its own in the extended session, but IBM, which also reported earnings after regular trading ended, dropped about 10 percent in later activity.

Investors' strong reaction to IBM continued the volatility of the market's regular session, in which the Dow Jones industrial average approached the 10,000 mark for the second time in four sessions. The Dow fell as much as 212 points before recovering some ground and closing down 149.09 at 10,089.71.

The Nasdaq composite index fell 76.32 to 3,213.96 during regular trading.

Investors had anguished about Intel's earnings ever since the chipmaker warned last month that third-quarter profits would drop far below expectations. On Tuesday, faced with the imminent release of those results, investors sold off high-tech and Internet stocks and then turned their ire toward the broader market.

But after the close of regular trading, the chipmaker reported earnings per share of 41 cents, ahead of the 38 cents analysts had predicted. Intel rose $1.38 to $37.56 in after-hours trading, building on a 50-cent gain during the regular session.

However, the market remained uneasy. While Intel enjoyed a bounce, many other high-tech stocks fell or rose only slightly in the after-hours market.

And IBM, which met Wall Street earnings estimates but reported low revenues, fell $11.13 in after-hours trading to $100, erasing a $1.88 gain in regular trading. Since IBM is a Dow component, the blue chip index is expected to open lower when regular trading resumes today.

In regular trading, chipmaker Micron Technology fell $5 to $28.69 after Paine Webber cut its rating from "buy" to "attractive," citing weak market conditions.

Investors also unloaded Internet stocks. America Online, Amazon.com and Yahoo! all fell to 52-week lows on concerns that their growth was slowing and earnings would fall short.

Yahoo! fell $6.36 to $48.89; Amazon was off $2.44 at $21.88; and AOL slipped $9.31 to $43.30.

Blue chips also fell, pushed lower by earnings worries and profit taking after two days of gains.

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