NEW YORK -- U.S. stocks relinquished some of Friday's gains yesterday amid concern over Christmas holiday sales and today's Federal Reserve committee meeting to review interest-rate policy.
A host of retail, semiconductor, telephone and chemical stocks led the decline, among them Dayton-Hudson Corp., Intel Corp., Bell Atlantic Corp. and Du Pont Co.
"Christmas sales are important because they give an idea of how the whole economy is going to go," said Steven Zenker, money manager at $100 million McCabe Capital Managers in King of Prussia, Pa. "Year after year, it always gets pushed to the last few days."
The Dow Jones industrial average fell 16.49, to 3,790.70, its first loss in four days. Aluminum Co. of America, Caterpillar Inc. and Philip Morris Cos. paced the decline. On Friday, the benchmark average surged 41.72, to 3,807.19, its first close above 3,800 since Nov. 18.
Among broader market indexes, the Standard & Poor's 500 Index declined 0.89, to 457.91, its first drop since Dec. 8. The Nasdaq Combined Composite Index slid 1.18, to 727.89.
Shares of Intel fell $1.6875, to $57.8125, amid concern that problems with the semiconductor company's flagship Pentium chip are mounting, traders said. The Santa Clara, Calif.-based company's stock is down about 11 percent since it disclosed on Nov. 25 that a flaw affects the chip's mathematical calculations.
The New York Times yesterday reported that a New York City bank discovered calculation errors that it attributed to the Pentium. On Dec. 12, International Business Machines Corp. said it would halt shipments of computers with the Pentium.
Another semiconductor company, Cyrix Corp., plunged $9.25, to $19.25, after saying it expects first-half earnings next year to be lower than expected because of manufacturing problems and lower prices for its chips.
Declining stocks outnumbered advancing issues by about 13-to-10 on the New York Stock Exchange, where about 275 million shares traded hands. That's down from the 483.2 million traded Friday -- the third-highest ever in exchange history.
Among retail stocks, Dayton-Hudson Corp. fell $2.25, to $77; Wal-Mart dropped 37.5 cents, to $22.625; Sears, Roebuck & Co. eased 75 cents, to $44.75; and Kmart Corp. dipped 37.5 cents, to $13.875. May Department Stores dropped 62.5 cents, to $34.25; J. C. Penney Co. dropped 25 cents, to $41.375; and Service Merchandise Co. fell 12.5 cents, to $4.875.
Liz Claiborne Inc. slumped $1.875, to $20. The women's clothing chain said it will close its 77-store First Issue chain and take a fourth-quarter charge against earnings of as much as $30 million.
Gambling and casino stocks rallied after ITT Corp. agreed to buy Caesar's World Inc. for $67.50 a share, almost 50 percent above Caesar's closing price of last Friday.
Caesar's shares surged $20.75, to $66; Circus Circus Enterprises Inc. gained $1.25, to $22.625; Promus Cos. added 87.5 cents, to $30.125; and MGM Grand Inc. rose 75 cents, to $26.375.
ITT shares fell 37.5 cents, to $81.50.