Big Blue Bruises Blue Chips

Profit-taking collared the U.S. stock market for the third session in a row Friday as the blue chip sector came under pressure.

The Dow Jones Industrial Average pulled back 143.41 points, or 1.5 percent, to 9,120.67.

International Business Machines (IBM) accounted for about one-half of the Dow's loss, falling 17 1/4 to 179 3/4.

On the week, the Dow fell 219.88 points, or 2.4 percent.

On the year, the Dow is off 60.76 points, or 0.7 percent, following gains of 33 percent, 26 percent, 22 percent, and 16 percent, in 1995, 1996, 1997, and 1998, respectively.

The unsettling situation in Brazil, where capital outflows continue at a brisk pace, gave investors something to mull besides the latest above-forecast earnings reports.

On the bright side, a snapback in the Internet group lifted investor spirits.

IBM announced a fourth-quarter profit of $2.47 a share, 2 cents above Wall Street's consensus forecast according to earnings estimate tracker First Call. IBM earned $2.11 in the fourth period of 1997. North American revenues rose 48 percent. But Morgan Stanley Dean Witter sliced its opinion of the shares to "outperform" from "strong buy."

Key U.S. corporations emerged this week bearing earnings reports that bested Wall Street forecasts - forecasts that in many cases had been ramped down in recent weeks. But profit-takers exacted a toll on many of the stocks in a "buy-the-rumor, sell-the-news reaction."

But many investment pros took the week's markdowns in stride, particularly the setbacks witnessed in the technology sector.

"There were an awful lot of technology stocks that got very extended," admitted Roger McNamee, general partner and co-founder of Integral Capital Partners, a family of investment funds. "Any technical analyst will tell you we were due for a pullback, if for no other reason than for people to catch their breath.

"The critical element of this earnings reporting season is the outlook that companies are giving for the first quarter and the rest of 1999," McNamee said. "And I think on balance people are cautiously optimistic about the outlook for 1999. I think they all have good pipelines."

Overseas, Brazil's currency, the real, softened again Friday following Thursday's tumble. Capital outflows remain problematic, with about $400 million leaving the country Friday on top of more than $400 million Thursday. Brazil's benchmark Bovespa stock index dipped 1.8 percent

Internet names sailed back into the winner's circle following six losses in seven sessions.

Excite (XCIT) gained 2 to 87 7/8. The Internet portal and search engine posted pro forma earnings of 4 cents a share in the fourth quarter, not including costs related to acquisitions. The figure matched the estimates of most Wall Street analysts according to a poll by First Call. A year ago, the company lost 26 cents a share on a pro forma basis. Tuesday, Excite said it will be purchased by At ome Corp.

In other cyber issues, Yahoo! added 21 to 286, Amazon.com advanced 17 to 123, eBay climbed 15 to 196 3/4, and Broadcast.com rebounded 27 3/4 to 136 1/4.

In Friday's market indicators:

• The Standard & Poor's 500 Index fell 0.8 percent.
• New York Stock Exchange losers sacked winners by 3 to 2.
• On the Big Board floor, turnover eased 11 percent to 775 million shares, or about 5 percent greater than the recent average.
• The Nasdaq Composite declined 0.2 percent. Declining issues beat gainers by 20 to 17 in the Nasdaq Stock Market. Volume totaled 1.01 billion shares.
• The Russell 2000 Index of small-capitalization stocks sank 0.4 percent.
• In the bond market, Treasurys picked up steam on safe-haven buying as worries that Brazil won't be able to defend its ravaged currency mounted and U.S. stocks fell. The 30-year Treasury rose 23/32, to yield 5.087 percent.