The Dow Jones Industrial Average closed down 27.17 points, or 0.3 percent, to 9,297.61, after being up as much as 96.44 points earlier.
The Nasdaq Composite sank 36.15 points, or 1.6 percent, to 2,259.03 for its fourth loss in five days.
A few positives emerged from Tuesday's action. Small-company stocks outperformed the broader market for the sixth day in a row, with the Russell 2000 Index of smaller stocks closing with a tiny rise. Meanwhile, medium-sized stocks also outperformed.
Upbeat analyst comments sent the airline group to turn in one of the day's best showings, while Internet shares closed mostly lower.
Hewlett-Packard (HWP) put on 2 3/4 to 68 5/8. It announced plans to split into two separate companies, one focused on H-P's measurement businesses and the other on the computing and imaging businesses. H-P stockholders will hold shares in each company.
Goldman Sachs analyst Glenn Engel hiked his opinion of the airline group to "moderate overweight" from "market weight," triggering broad mark-ups in the segment. Engel cited an upturn in the National Association of Purchasing Management's February business survey, which rose to 52.4 from from 49.5 in January. The NAPM report is widely looked on as a leading indicator of manufacturing activity. A figure above 50 relates to an expanding industrial sector.
AMR (AMR) climbed 1 3/4 to 57 7/8 and UAL (UAL) rose 3 3/8 to 65 3/8 after Goldman's Engel raised his ratings to "market outperform" from "market perform." The analyst raised his 1999 earnings forecast for Delta Air Lines (DAL) to $6.40 a share from $6.20. The stock picked up 3 to 65 15/16. Engel also lifted his 1999 profits estimate for Southwest Airlines (LUV) to $1.20 a share from $1.15.
In addition, Alaska Air Group (ALK) rose 2 1/4 to 53 1/16 and US Airways Group (U) improved 2 5/16 to 51 1/4.
In Tuesday's market indicators:
- The Standard & Poor's 500 Index fell 0.9 percent.
- New York Stock Exchange losers bested winners by 8 to 7.
- On the Big Board floor, 747 million shares turned over, an 8 percent pick-up from Monday.
- Declining issues bettered risers by 11 to 8 in the Nasdaq Stock Market. Volume totaled 882 million shares.
- The 30-year Treasury rose 23/32, to yield 5.617 percent.
Among the companies in the news:
- Xylan (XYLN) leaped 8 13/16 to 35 3/4. France's Alcatel (ALA) will purchase the manufacturer of high-bandwidth switching systems for $37 a share. Alcatel shares tacked on 1/2 to 21 7/8.
- 3Com (COMS) slid 3 11/16 to 27 amid worries that the computer networker won't meet Wall Street expectations when it reports fiscal third-quarter results in about three weeks time. Merrill Lynch lowered its third-quarter estimate to between 28 cents and 32 cents a share from 36 cents.
- Micron Electronics (MUEI) stumbled 2 5/8 to 11 13/16. The direct marketer of personal computers said second-quarter revenues and profits should undercut those of the first quarter. It blamed purchase deferrals related to Intel's Pentium III processor introduction, anticipated seasonal slowdown in Micron's government segment, and continued industry pricing pressure in its consumer business.
- VISX (VISX) bolted 19 1/4, or 32 percent, to 79 3/4. The laser systems manufacturer fattened its view of first-quarter net to between 51 cents and 55 cents a share, well above most analysts' forecast of 36 cents. VISX pointed to hefty demand for its Excimer laser system as the reason for its rosy outlook.
- Dialogic (DLGC) skipped ahead 3 1/8 to 34. Microsoft will license the telecommunications equipment supplier's CT Media server software, and Dialogic will provide development services to Microsoft in exchange for $20 million.
- Dayton Hudson (DH) subtracted 2 1/4 to 61 7/8. It easily dispensed with Wall Street estimates when it reported fourth-quarter operating profits of 97 cents a share. A survey of analysts by First Call Corp. had called for 90 cents. Sales at outlets open a year or more grew 6.1 percent.
- Federated Department Stores (FD) rose 3/4 to 40 1/16. It netted $1.88 a share in the fourth quarter, 6 cents richer than the First Call Corp. poll of analysts had projected. Locations open at least a year reported sales growth of 4.1 percent.
- Enterprise software developer Citrix Systems (CTXS) advanced 2 to 80 5/8 on news of a two-for-one split of its shares.
- InterVoice (INTV) drove ahead 2 1/16, or 18 percent, to 13 1/2. The maker of telecommunications gear believes fourth-quarter net will come in between 24 cents and 26 cents a share. According to First Call Corp., most analysts had eyed 19 cents. The telecommunications concern pointed to increased sales, heightened expense control efforts, and tightened credit practices as the underlying causes for its revised outlook.
- Goldman Sachs began coverage of Suiza Foods (SZA) by placing the stock on its "recommended list." The shares appreciated 1 7/8 to 39 13/16.
- eBay (EBAY) escalated 9 7/16 to 117 1/16 in the wake of its three-for-one stock split.