Stocks fall sharply on Kodak earnings warning

Journal Record, The (Oklahoma City), Sep 27, 2000

NEW YORK (AP) -- Stocks fell sharply Tuesday after an earnings warnings from Eastman Kodak triggered yet another round of selling by investors already nervous about third quarter results.

The decline, the latest of many this month, quickly spread to blue chip and technology stocks, reflecting persistent concerns that higher oil prices, the strong U.S. dollar and slowing economic growth are hurting the bottom lines of many companies.

The Dow Jones Industrial Average fell 176.83 to 10,631.32.

Broader indicators were also lower. The Nasdaq Composite was down 52.12 at 3,689.10 and the Standard and Poor's 500 stock index slipped 11.82 to 1,427.21.

Dow component Kodak warned of disappointing profits, primarily because of rising material costs and weakness in the euro, Europe's chief currency. The photographic products manufacturer fell $14.81 to $44.19, a nearly 25 percent decline, on the New York Stock Exchange.

With the third quarter earnings reporting season coming up, investors have been unloading stocks whose companies warn of lower- than-expected profits. While Kodak has struggled in recent years amid intense competition in the film industry, its announcement Tuesday increased Wall Street's uneasiness about earnings.

`'These earnings preannouncements are continuing to keep the market off balance, whether they're Kodak, Intel, DuPont or whoever,'' said Bill Barker, an investment strategy consultant at Dain Rauscher, who blamed Kodak for much of Tuesday's drop in the Dow.

`'Investors are very nervous and reluctant to put money to work right away until we get through this.''

Kodak also fell as its rating was cut to `'neutral'' from `'attractive" by a PaineWebber analyst.

Printer manufacturer Lexmark International tumbled $14.50 to $37.50, a nearly 28 percent drop, after the company warned of lower- than-expected third quarter earnings and analysts at Paine Webber and Bear Stearns downgraded the stock.

Concerns about the price of oil also pushed some old-economy retailers lower. The price of a barrel of sweet crude on the New York Mercantile Exchange was $31.50, down nearly $7 from last week, but worries about its effect on corporate profits continue.

Discount retailer Dollar General fell $2.94 to $17 after a Goldman Sachs analyst downgraded the stock. And Wal-Mart was down $2.56 at $47.06.

Energy issues were higher on the expectation that oil-related companies would benefit from higher prices. Halliburton was up 90 cents at $47.63; Exxon Mobil gained 77 cents to $86.63; and Enron rose $1.06 to $85.50.

"The market is still nervous about oil," said Alan Skrainka, chief market strategist at Edward Jones of St. Louis. "Even if you do get more oil to the market, it's not going to translate into lower prices at the pump right away. And higher oil prices take money out of consumer's pockets."

Technology stocks were more mixed. Microsoft rose $1.44 to $62.69 after the Supreme Court ruled that the software giant's appeal of its antitrust case should be heard in a lower court.