Coke Forecast, Clinton Woes Trip Wall Street

An earnings warning from Coca-Cola and continuing jitters over President Clinton’s fate weighed on markets on Friday, with stocks, bonds and the dollar all suffering losses.

The Dow Jones industrial average fell 19.82 points to 8,821.76, recovering from a midday decline that took it down as much as 111 points.

For the week the Dow still lost 194.38 points, or 2.2%.

In the bond market, Treasury yields jumped, with the bellwether 30-year T-bond ending at 5.02%, up from 4.95% on Thursday but still down from 5.04% a week ago.

The impeachment threat that could weaken Clinton’s ability to lead effectively is making some investors, especially foreigners, cautious about the outlook for U.S. assets, analysts said.

“There could be weeks of uncertainty until this [impeachment] gets resolved,” noted Alan Kral, who helps manage $550 million at Trevor, Stewart, Burton & Jacobsen.

Foreigners’ nervousness may be showing up in the dollar: It fell 0.91 yen to 116.42 in New York, the lowest in five weeks. The dollar also slid against the German mark.

“There’s no enthusiasm to buy dollars,” said Robert Katz, a currency trader at MTB Bank.

On Wall Street the focus Friday was on Coca-Cola, which made two major announcements.

The company said it will buy rival Cadbury Schweppes’ brands outside the U.S. for $1.85 billion, in a bid to boost global growth.

At the same time, Coke warned that fourth-quarter earnings will be 24 to 25 cents a share--as much as 20% below forecasts--as it continues to suffer from slowing sales in much of Asia, Latin America and Eastern Europe. Coke earned 33 cents a share a year ago.

The stock sank as low as $61.94 before closing at $62.88, down $3.19 for the day.

Despite its overseas woes, Coca-Cola is sticking to its strategy of investing heavily in slumping markets, hoping to recoup lost sales when those economies rebound.

Coke joins a growing list of companies warning that near-term earnings won’t meet forecasts, for any number of reasons. Also on Friday AMR, parent of American Airlines, fell $4.25 to $58.25 after telling analysts to trim their average fourth-quarter estimate of $1.35 a share because of increased fare discounting.

In general, “Earnings growth expectations have just been too high” for corporate America, said Robert Natale of Bear Stearns Asset Management.

Those expectations may come down further--and with them, stock prices--as more companies project weaker results in coming weeks, analysts warn.

Among Friday’s highlights:

* Losers topped winners by 18 to 12 on the New York Stock Exchange and by 22 to 17 on Nasdaq. Still, the Nasdaq composite rose 13.35 points, or 0.7%, to 2,029.31, as buyers again returned to some major tech names.

Oracle, for example, surged $2.31 to $37.25. The database software maker’s latest quarterly earnings, reported Thursday, were sharply better than expected.

Other gainers included Intel, up $1.81 to $116.44; and Sun Microsystems, up $4.38 to $77.38.

* On the downside, Telxon plunged $12.25 to $15 after the maker of wireless information systems said it will restate downward its second-quarter results, and warned that its bottom line will fall short of estimates for the rest of fiscal 1999.

* Eli Lilly gained $3.13 to $89.94 after the company released a study showing that its osteoporosis drug Evista helps reduce the risk of breast cancer.

Market Roundup, C4