Newspaper article THE JOURNAL RECORD

Earnings Letdowns Cause Wall Street Horror Shows

Newspaper article THE JOURNAL RECORD

Earnings Letdowns Cause Wall Street Horror Shows

Article excerpt

The corporate earningsporting season has turned into a time of high anxiety for many investors in the stock market.

Even a small letdown in a company's profit figures these days can be quickly translated into a big drop in the price of its stock.

Of course, there has always been a certain amount of suspense for shareowners whenever a public company in which they hold an interest prepares to issue its quarterly operating results. But lately these little dramas have shown a tendency to turn into horror shows.

The motto of the marketplace seems to be "one strike and you're out," said Raymond F. DeVoe Jr., an analyst at Legg Mason Wood Walker Inc.

"This has been one of the most punishing markets I've ever encountered," DeVoe declared. "There is absolutely no margin for disappointment."

Added Martin Zweig, a Wantagh, N.Y., investment adviser: "Numerous stocks have cratered recently, taking sickening oney hits. When a lot of stocks are doing that, it's usually a warning for the market as a whole."

An extreme example of this phenomenon arose on July 2, when six separate stocks traded in the Nasdaq overeunter market suffered losses of more than 40 percent in a single session.

The largest of those losers _ Easel Corp., down 13 at 8; Network General, down 10 at 9, and Vitesse Semiconductor, down 4 at 4 _ had their market values cut in half.

"It's been the closest thing to a minefield that I've ever encountered," said DeVoe.

Like Zweig, a good many analysts regard such behavior as a sign of a market on shaky underpinnings.

"In a truly healthy bull market, you simply don't see so many `explosions' taking place on the tape," asserted Stan Weinstein, publisher of the Professional Tape Reader advisory in Hollywood, Fla. "This is a sign of both technical weakness and a lack of liquidity under the market."

To some observers, events like these also tell a lot about the edgy mood of investors as they watch the economy struggling to recover from the recession. …

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