Stocks Flirt With 8,000, Then Take A Big Dive

The Dow Jones industrial average stumbled in its pursuit of 8,000 Wednesday, dropping sharply on worries about glowing corporate profit forecasts after coming within 10 points of the milestone.

After an opening rally that took the Dow to 7,991.26, the Dow dropped as much as 167.38 in the final hour of trading. It was bouncing off that low at the closing bell, when the average of 30 blue-chip stocks was off 119.88 at 7,842.43.

The drop from Tuesday’s record of 7,962.31 amounted to a loss of 1.5 percent. The selloff more than erased the previous day’s 103.82-point surge.

Declining issues outnumbered advancers by a 3-to-2 margin on the New York Stock Exchange, where volume totaled 589.08 million shares as of 4 p.m. vs. 525.65 million in the previous session.

While the Dow and broad-market indicators mostly fell from Tuesday’s records, the technology heavy Nasdaq composite index rose to new heights.

Traders attributed Wednesday’s decline to investors reaping profits from Tuesday’s surge, compounded by computer-driven sales and fear that the previous session’s jump was overblown.

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

NYSE

Wells Fargo, down 18-3/8 to 260-5/8.

The San Francisco-based bank said earnings would be below Wall Street’s expectations. Wells Fargo blamed costs tied to its acquisition of First Interstate Bancorp last year.

Talbots, down 5-15/16 at 23-1/16.

The women’s apparel retailer said it expected earnings for its second quarter ending Aug. 2 to fall below analysts’ expectations. Securities firms immediately downgraded the company’s stock.

Procter & Gamble, down 1-7/8 at 149-3/16.

The Cincinnati-based consumer products maker’s stock surged late Tuesday after it said it would split its stock 2-for-1 and raise its quarterly dividend by 12 percent. But the company said Wednesday it filed with the Securities and Exchange Commission for $1.38 billion of debt securities and warrants for general purposes, the Dow Jones News Service reported.

NASDAQ

Control Data Systems, up 4-9/16 at 20-1/4.

The computer systems integrator agreed to be bought by investment firm CDSI Holding Corp., the Dow Jones News Service reported. Arden Hills, Minn.-based Control Data said the offer should begin July 15.

AMEX

Keane, up 2-1/16 at 62-7/16.

The Boston-based computer application developer said it garnered a $6 million contract from Alamo Rent-A-Car to prepare the rental agency’s computer system for the year 2000, the Dow Jones News Service reported. The company plans to complete the work by 1999.