NEW YORK -- U.S. stocks fell yesterday as continued concern about sales of Microsoft Corp.'s flagship software program Windows 95 pushed technology shares lower.
That countered gains in bank shares, which rallied after Chase Manhattan Corp. and Chemical Banking Corp. agreed to merge, topping Citibank as the largest U.S. bank with $297 billion in assets.
"The big deal is the Chemical-Chase merger," said Phil Schettewi, a portfolio strategist who manages $3 billion for Loomis, Sayles & Co. "The whole financial services industry still has room to consolidate. I don't think the merger game is over."
The Dow Jones industrial average slipped 7.40, to 4,594.00, after climbing as much as 19.37, to 4,620.77. J. P. Morgan & Co., Procter & Gamble Co. and International Paper Co. rose, while shares of International Business Machines Corp., Merck & Co. and Sears Roebuck & Co. slipped.
A decline in IBM shares helped turn around the 30-stock average's gains. The computer company's shares fell $2.25, to $101.625. Merck's stock was down 50 cents to $50.
The losses in technology shares countered advances in money center and regional banks to push the broader Standard & Poor's 500 index down 1.05 to 559.05, turning around its 2.12-point gain to 562.22 earlier in the day.
Microsoft's $4.3125 decline to $90.0625 sparked a decline in other technology shares and helped to drag the Nasdaq composite index down 11.82, to 1,008.15, its biggest drop since it lost 35.70 points July 19.
The Russell 2000 index of small companies slipped 1.04, to 303.32, its lowest level since Aug. 17. The Wilshire 5000 index slipped 13.06, to 5,567.21, and the American Stock Exchange market value index was down 0.79, to 530.18.
Some 1,087 shares rose and 1,121 fell on the New York Stock Exchange. About 267.87 million shares changed hands, the seventh straight day volume has fallen below daily average volume of 339.47 million.
Banks weren't the only group that saw merger activity. Drug companies North American Biologicals Inc. and Univax Biologics Inc. signed an agreement to merge in a stock transaction. Both companies' shares slipped, with Univax dropping 12.5 cents, to $8, and North American Biologicals sliding 81.25 cents, to $10.375.
Bank shares surged after Chase and Chemical announced the largest U.S. bank merger agreement ever. Both Chemical and Chase shares soared to 52-week highs, rising $5.75, to $60.125, and $6.625, to $59.625, respectively.
Speculation that more banks will merge boosted other financial stocks as well. Shares of Bankers Trust New York Corp. shares rose $2.25, to $69.875, and BankAmerica Corp.'s stock jumped $1.375, to $56.75. J.P. Morgan shares climbed $1.625, to $73.50.
The S&P major regional banks index of 23 stocks has jumped 24.9 percent so far this year as bank mergers flourished, compared with the broader index's 20 percent gain. On Friday, Boatmen's Bancshares Inc. announced that it agreed to buy Fourth Financial Corp. for $1.2 billion.