Stocks fall amid worry about rates and profits Dow industrials finish 1 point higher, but other indexes sag

April 12, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks fell for a fourth time in five days yesterday amid mounting concern that higher interest rates will slam the door on corporate profit growth.

The Dow Jones industrial average, which dropped to its lowest point since Feb. 6 when it touched 5,415.53 during the day, managed to close 1.09 higher, at 5,487.07.

The broader market stayed down, however. While first-quarter earnings are matching expectations for the most part, investors said problems may arise as the year progresses. Semiconductor shares dropped after Altera Corp. said orders for its chips are slowing.

Stock prices seesawed after a midmorning tumble, triggering the New York Stock Exchange's "uptick" rule twice. The trading curb, which is put into effect when the Dow industrials fall more than 50 points, has now been invoked 21 times this year as a way to stabilize the market.

The Standard & Poor's 500 index slid 2.32, to 631.18, its lowest since Jan. 30. In addition to semiconductor stocks, shares of bank, health care and chemical issues slumped. The Nasdaq composite index slipped 8.15, to 1097.14.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks fell 1.56, to 329.47; the Wilshire 5,000 index slumped 37.61, to 6,240.14; the American Stock Exchange market value index rose 0.23, to 570.19; and the S&P 400 Midcap index slipped 2.74, to 224.86.

Some 1,586 shares fell and 813 rose on the New York Stock Exchange. About 519.66 million shares changed hands, making yesterday the sixth-most active day ever on the NYSE.

Increasing competition from the bond market, where yields are at their highest since August, added to the stock market's woes. The yield on the benchmark 30-year Treasury bond, which moves in the opposite direction of its price, ended the day at 6.93 percent -- almost a full percentage point higher from where it ended 1995.

Boeing Co. and J. P. Morgan & Co. led the Dow industrials' decline for most of the day. Boeing's stock fell $1.375, to $79.125, a day after its main competitor, Airbus Industrie, won an order for 30 aircraft worth $1.5 billion from China.

J. P. Morgan fell $1.875, to $77.125. The bank's first-quarter earnings rose 72 percent and handily beat analysts' expectations as trading profits surged. Yet its stock dropped because investors are pessimistic about a repeat performance.

Altera fell $12.375, to $49.125, with more than 13.2 million of its shares trading. The San Jose, Calif.-based company warned that orders for its specialty chips slowed in the past few months. The warning overshadowed better-than-expected first-quarter earnings of 68 cents a share.

The Philadelphia semiconductor index fell 4.46, to 183.34. Lattice Semiconductor Corp. dropped $2.625, to $29; Novellus Systems Inc. dropped $1.75, to $45; Applied Materials Inc. gave up $1.25, to $35.625; and Intel Corp. fell $1.3125, to $60.4375.

The outlook for a stronger economy hurt shares of drug and health-care products makers.

The Morgan Stanley consumer index of 30 stocks slid 1.77, to 284.76. Medical products company Medtronic Inc. fell $2.125, to $52.75; American Home Products Corp. slid $2.75, to $103, and food distributor Sysco Corp. gave back 62.5 cents, to $32.25.

The day's best-performing stocks were shares of retailers, which gained amid optimism that sales will accelerate as the economy grows.

Sears, Roebuck & Co., a Dow component, rose $2.50, to $48.875, helped by a 6.8 percent jump in sales. Limited Inc. rose 50 cents, to $18.75, after it said sales at stores open at least a year rose 8 percent, the biggest increase in at least two years.

Dillard Department Stores Inc. rose $1.375, to $33.75; Mercantile Stores Co. added 12.5 cents, to $57.875; Gap Inc. rose $1, to $27.25; TJX Cos. gained 50 cents, to $24.50; and Ross Stores Inc. climbed $3.75, to $30.625.

Pub Date: 4/12/96

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