Dow falls 43 points as bond yields rise Consumer, drug stocks lead retreat, but computer issues continue to rally

March 28, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks posted their biggest drop in almost three weeks yesterday as rising bond yields made it less likely that earnings will beat forecasts this year.

The Dow Jones industrial average fell 43.72 to 5,626.88, its steepest decline since a 171-point slide on March 8. When the 30-stock average fell more than 50 points at 3: 01 p.m., the New York Stock Exchange's "uptick" rule was triggered to stabilize the market. It was the 17th time this year that the curb took effect.

The Dow's retreat was led by shares of United Technologies Corp., Exxon Corp., Procter & Gamble Co. and Philip Morris Cos. P&G fell $1.625 to $85.75 after the company said it will reduce the price of some of its tissues, paper towels and bath tissue.

The Standard & Poor's 500 index fell 4.06 to 648.91, also its biggest decline since March 8, when it tumbled 20.14 points. Kimberly-Clark Co., maker of Huggies diapers and Kleenex tissues, slid $3.625 to $74.125 on the P&G price cuts.

Higher bond yields fueled the drop in stocks. The yield on the benchmark 30-year Treasury bond, which moves in the opposite direction of its price, jumped to 6.68 percent from 6.57 percent yesterday.

Some 1,278 shares dropped and 1,049 rose on the New York Stock Exchange, where 402.9 million shares changed hands. The three-month daily average volume is 420 million shares.

The Nasdaq composite index, full of computer, software and semiconductor issues, bucked the trend. The index closed up 5.53 at 1,093.88. At one point, the index rose 10.43 points.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 0.78 to 328.49; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 24.16 to 6,374.15; the American Stock Exchange market value index slid 0.12 to 568.59; and the S&P 400 Midcap index gained 0.67 to 229.63.

Yesterday's most active stocks in U.S. composite trading were Orange PLC, EMC Corp., Cisco Systems, Imatron Inc. and Intel.

Semiconductor and computer stocks advanced on optimism that business will pick up soon because prices for their products have dropped.

Companies such as Compaq Computer Corp. and chip maker Micron Technology Inc. have been lowering prices this month because of slackening demand.

While the cuts have hurt profit margins and caused many technology stocks to wilt, the lower prices could lead businesses and consumers to boost purchases, analysts said.

Pub Date: 3/28/96

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