Stocks fall in light month-end trading Growing economy raises fears of Fed action, higher borrowing costs

June 01, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks fell yesterday in light trading for a third time in four days, amid concern that interest rates will be forced higher by a growing economy.

The Nasdaq composite index bucked the trend, boosted by a rally in computer stocks after Intel Corp. said it expects consumer demand to soar as PCs get cheaper. The Nasdaq rose to 1,243.43.

The Dow Jones industrial average slid 50.23 to 5,643.18. The broader Standard & Poor's 500 Index fell 2.58 to 669.12 as losses in interest-rate-sensitive utility, financial and telephone shares overshadowed soaring chip, computer and software stocks.

The Russell 2,000 index, which tracks shares of small and mid-size companies, rose 1.51 to 361.85; the Wilshire 5,000 index rose 32.52 to 5688.39; the S&P Midcap index fell 0.65 to 239.89; and the American Stock Exchange market value index rose 1.52 to 610.93.

Declining stocks outnumbered advancers 1,275 to 1,090 in New York Stock Exchange trading. About 351 million shares changed hands; the Big Board has averaged 423 million a day since the beginning of the year.

For the week, the Dow industrials fell 119.68 points, or 2.08 percent. The S&P 500 fell 1.28 percent and the Nasdaq fell 0.35 percent. Last week, all three major indexes set records. For the month, the Dow rose 74.10 points, or 1.33 percent, from April 30's close of 5,569.08.

Bond yields rose amid expectations that the Fed may raise rates as early as July.

The yield on the benchmark 30-year Treasury bond rose above 7 percent for the first time in three weeks, settling up 6 basis points at 6.98 percent.

Intel surged $4, to $75.50, a day after the nation's biggest semiconductor maker told an analysts' meeting that it sees demand soaring as computers get cheaper, contrary to the prevailing wisdom that the world faces a chip glut. Intel's shares were raised to a "buy" by Merrill Lynch & Co.

Among other semiconductor stocks that gained, Motorola Inc. rose $1.125 to $66.75; Applied Materials Inc. climbed $1.50 to $37.25; and LSI Logic Corp. rose 37.5 cents to $31.125.

Oil shares fell amid concern that crude oil prices, now about $19.71 a barrel, will slide as Iraq starts selling oil. Exxon Corp. fell $1.875 to $84.75; and Chevron Corp. fell 62.5 cents to $59.75.

Republic Industries Inc. rose 4.8125 cents to an all-time high of $52 after the company said it agreed to buy landfill operator Addington Resources Inc. for $360 million in stock, the latest in a string of a dozen acquisitions in the year since H. Wayne $H Huizenga became its chairman.

Pub Date: 6/01/96

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