Profit Worries Drive Stocks Lower

Stocks fell Tuesday, led by banking and energy shares, as investors remained fixated on company profit worries and found little solace in another record-setting drop by a key interest rate.

The Dow Jones industrial average closed with a loss of 72.74 at 7,906.25 after sliding to a deficit of nearly 100 points late in the heavily traded session.

Broad-market indicators also posted sizable losses amid the nagging uncertainties over whether the barrage of fourth-quarter profit reports beginning next week will reveal any major damage from the economic crisis in Asia.

The selling never really picked up momentum, however, and analysts hesitated to read much significance into such a modest decline following some substantial gains over the past week and a half.

“We have so many concerns and cross-currents on this Asia-Pacific thing that (the market) won’t go up every day. It will go up in fits and starts, and this is one of the fits,” said Don Hays, director of investment strategy at Wheat First Butcher Singer in Richmond, Va.

Declining issues outnumbered advancers by nearly a 2-to-1 margin on the NYSE, where volume totaled 617.60 million shares as of 4 p.m., down slightly from Monday’s hefty tally of 626.27 million.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

Citicorp, down 7-3/8 at 123.

BankAmerica, down 3-11/16 at 69-1/8.

BankBoston, down 2-3/8 at 94-5/8.

Chase Manhattan, down 5-1/4 at 107-3/16.

Merrill Lynch analyst Judah Kraushaar cut his intermediate-term rating on Citicorp to “accumulate” from “buy” and trimmed his 1998 earnings forecast for the banking giant, Dow Jones News Service reported. The analyst also reduced his 1998 forecasts for BankAmerica, BankBoston, and Chase Manhattan.

Advanced Micro Devices, up 5/8 at 19-15/16.

Compaq Computer introduced 15 new Presario computers, including four lower-priced models built with AMD’s K6 semiconductor rather than the Pentium II chip by Intel.

NASDAQ

Apple Computer, up 3-1/16 at 18-15/16.

The struggling PC maker surprised Wall Street by announcing it would post a profit of more than $45 million for the final three months of 1997 thanks to cost cuts and strong demand for its new models.

Omega Research, down 1-3/4 at 3-1/16.

The Miami-based maker of investment analysis software cautioned that it will post a disappointing fourth-quarter profit. Omega blamed weak demand.