<THE FOOLISH FOUR>

Rumors, Analysts, Law
by Robert Sheard

LEXINGTON, KY. (August 14, 1998) -- In a choppy session for the Dow, which saw trading curbs in place on both the upside and downside during the day, earnings warnings, takeover rumors, and litigation settlements were the talk of the day.

J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %>, a perennial member of the high-yield set, gained more than 6.5% on the day as a result of rumors that it's in talks to merge with a large European bank. One possibility being thrown around is Germany's largest investment house, Deutsche Bank.

Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> shares ended up roughly half a percentage point after the company announced it will take a $103 million pre-tax charge to settle litigation with the State of Texas. The company is revising its second-quarter earnings lower to account for the charge.

Also today, a federal appeals court overturned a lower-court decision, claiming that Congress did not grant regulatory authority over tobacco to the Food and Drug Administration. The FDA has been pushing for such authority for some time in order to regulate nicotine as a drug.

And finally, after DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> warned that its third quarter earnings would be on the low end of the range of analyst estimates, Goldman Sachs took it out back and kicked it in the shins. Goldman cut the ratings on both DuPont and Dow Chemical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOW)") else Response.Write("(NYSE: DOW)") end if %>, moving them from the "market outperform" to the "recommended" list. DuPont shares gave up almost 4% on the day after giving up more than 9% yesterday.

For a complete recap of year-to-date returns for the thirty Dow stocks and a handful of high-yield variations (through August 12), check out the 1998 Dow Returns file, updated today. Have a nice weekend.

Current Dow Order | 1998 Dow Returns

[Robert Sheard is the author of the The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and your local bookseller.]

08/14/98 Close
Stock  Change   Last 
 -------------------- 
 UK   -1  7/16  46.06 
 IP   -1  7/16  41.63 
 MO   +  15/16  42.31 
 EK   +   1/8   82.50 
  
 
 
                    Day   Month    Year 
         FOOL-4   -0.99%  -3.73%   9.72% 
         DJIA     -0.41%  -5.16%   6.53% 
         S&P 500  -1.13%  -5.17%   9.51% 
         NASDAQ   -0.68%  -4.39%  14.00% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  206 Eastman Ko    60.56     82.50    36.22% 
  12/31/97  291 Union Carb    42.94     46.06     7.28% 
  12/31/97  289 Int'l Pape    43.13     41.63    -3.48% 
  12/31/97  276 Philip Mor    45.25     42.31    -6.49% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  206 Eastman Ko 12475.88  16995.00  $4519.13 
  12/31/97  291 Union Carb 12494.81  13404.19   $909.38 
  12/31/97  289 Int'l Pape 12463.13  12029.63  -$433.50 
  12/31/97  276 Philip Mor 12489.00  11678.25  -$810.75 
  
  
                              CASH    $754.73 
                             TOTAL  $54861.79