Computer chips' slide weighs on market But oil companies gain, tempering the decline

Dow index falls 12.65

March 07, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks fell yesterday, led b semiconductor shares after Texas Instruments Inc. said prices for some computer chips are down by almost half this year. Gains in shares of oil companies tempered the decline.

After similar warnings from Micron Technology Inc. and LSI Logic Corp. last week, some investors concluded that chip shares will languish until the excess supply dries up. Since peaking in September, many of the companies lost about half their value.

The Dow Jones industrial average fell 12.65 points to 5,629.77 after a three-day advance that added 156.77, or 2.9 percent. It touched an intraday record of 5,666.62 before falling back. Merck & Co., International Business Machines Corp. and DuPont Co. paced the retreat.

In the broad market, the Standard & Poor's 500 index fell 3.79, to 652.00, its first drop in three days. The Nasdaq composite index, full of computer and software stocks, fell 4.99 points to 1,091.82 and gave back about half of the previous day's gain.

The Philadelphia Semiconductor index fell 8.57, to 171.61. The index of 16 stocks is down 17.3 percent since Feb. 22, and 43 percent since a record 301.65 Sept. 11.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 0.26, to 327.11; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 19.34, to 6,401.56; the American Stock Exchange market value index climbed 0.69, to 569.84; and the S&P 400 Midcap index rose 0.70, to 230.35.

The day's most active stocks in U.S. composite trading were Kmart Corp., Glenayre, Micron, Glaxo Wellcome PLC's American depositary receipts and Sun Microsystems Inc.

Among individual stocks, Texas Instruments fell $2.75, to $47.625; Intel Corp. slid $2.125, to $53.25; and National Semiconductor Corp. dropped 62.5 cents, to $14.625. Micron Technology fell $2, to $29.125, its lowest since Feb. 21 last year.

On the New York Stock Exchange, 1,187 stocks fell and 1,140 issues rose. About 428.2 million shares changed hands on the Big Board, exceeding the three-month daily average of 413.4 million shares.

Among the most active issues in U.S. trading was Glenayre Technologies Inc. The company's stock tumbled $10, to $32.25, after the maker of telecommunications equipment said first-quarter sales could be hurt because of a regulatory ruling.

Oil shares rose after a report from the American Petroleum Institute showed crude oil inventories fell 2.7 million barrels last week to 297.5 million, the lowest point since at least 1977.

The American Stock Exchange oil index rose 3.06, to 328.55, and up 2.78 percent in a week. Texaco Inc. rose $2.875 to a record $83.125; Exxon Corp. climbed $1.375, to $82.25; and Chevron Corp. rose 62.5 cents to $56, together adding about 14 points to the Dow average.

Also helping the oil stocks, analysts said, is their high dividend yields, which are growing in value because the outlook for the economy and interest rates is unclear. With its stock rising $1.875, to $113, yesterday, Atlantic Richfield Co.'s annual dividend of $5.50 a share yields about 4.87 percent, double the S&P 500's.

Bank shares fell as the yield on the benchmark 30-year bond rose as high as 6.45 percent from 6.38 percent yesterday.

BankAmerica Corp. slid $1.125, to $76.375; Wells Fargo & Co. slipped $3.375, to $249.25; Mellon Bank Corp. dropped $1, to $57.375; and Suntrust Banks Inc. shed 87.5 cents to $72.875.

One bright spot among technology shares was America Online Inc., up 37.5 cents, to $46.50.

And investors continue to reward companies whose earnings exceed expectations. Shares of Staples Inc. rose $1.375, to $29.50, extending a two-day rally. Late Tuesday, the Framingham, Mass., company said fourth-quarter earnings rose 63 percent, fueled by strong sales of its office supplies.

Pub Date: 3/07/96

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