U.S. stocks decline, led by Intel, IBM Slower growth is feared in computer industry

Wall Street

Dow off 8.50, Nasdaq, 12.47

June 15, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks fell yesterday, led by shares of Intel Corp. and International Business Machines Corp. amid concern that growth is slowing in the computer industry.

Disappointing profits at chip-maker Micron Technology Inc. and a slew of warnings from computer-related companies contributed to the decline.

The Dow Jones industrial average fell 8.50 to 5,649.45, led by IBM, down $1.625 at $101.625; the Standard & Poor's 500 index fell 2.07 to 665.85; and the Nasdaq composite index, heavy with computer companies, retreated 12.47 to 1,213.18.

The Russell 2,000 index of smaller companies' shares dropped 2.32 to 255.08; the Wilshire 5,000 declined 24.83 to 6,628.95; and the American Stock Exchange market value index fell 2.88 to 593.85.

Declining stocks outnumbered advancing stocks by 1,325 to 1,007 on the New York Stock Exchange.

Mining companies such as Asarco Inc., Freeport McMoRan Copper & Gold Inc. and Phelps Dodge Corp. lost ground as copper prices plunged amid concern that Japan's Sumitomo Corp. would flood the market by selling some of its horde.

Sumitomo said after the close of trading Thursday that its former chief copper trader concealed $1.8 billion in losses.

Asarco fell 75 cents to $28.375; Freeport McMoRan fell 37.5 cents to $30.50; and Phelps Dodge lost 50 cents to $65. Copper prices fell 10 percent on the New York Mercantile Exchange Comex division, to the lowest level in 13 months.

Other metals companies also slid as investors anticipated slower growth in the second half of the year. Aluminum Co. of America fell 75 cents to $58.625. Inco Ltd., a Canadian miner, fell 25 cents to $31.625 in New York.

For the week, stocks fell. The Dow industrials slid 0.84, the S&P 500 dropped 1.11 percent and the Nasdaq retreated 1.35 percent.

Semiconductor shares fell for a second straight day after Micron reported earnings for the fiscal third quarter were below expectations and that it will probably show a loss in the current BTC quarter. Micron fell 50 cents to $29.75; Intel Corp. fell $2 to $73; and Lam Research Corp., a semiconductor equipment maker, dropped $1.25 to $30.50.

Micron said it earned 27 cents a share, short of the 31 cents a share estimated by analysts.

A warning of unexpectedly slow sales at Madge Networks NV, a computer network company, depressed shares in that market. Madge dropped $6.375 to $17.125; Cisco Systems Inc. fell 62.5 cents to $55.25; and Bay Networks Inc. slid 87.5 cents to $H $27.125.

Communications shares dropped after California Microwave Inc., a wireless company, said it expects fiscal fourth-quarter profits to fall well short of analysts' forecasts because of lower-than-expected sales. California Microwave fell $2.125 to $16.375, and Qualcomm Inc. fell $2 to $48.25. U.S. Cellular Corp. fell 62.5 cents to $31.50.

Quarterdeck Corp. said it expects a "substantial" loss in its current quarter because of slow sales of its memory management and communication software as well as acquisition costs. Its shares fell $3.0625 to $9.8125.

Among steady-earning drug and consumer products companies, Pfizer Inc. rose $3.125 to $75.75, and American Home Products Corp. rose 75 cents to $59.50.

Speculation that Pfizer will merge its overseas operations with Glaxo Plc. helped to lift its shares. Glaxo finished yesterday unchanged at $26.

Shares in Philip Morris Cos., the world's largest tobacco company, gained $1 to $105.375.

Kimberly-Clark Corp., maker of Huggies diapers, rose 25 cents to $73.375.

A rally in bonds failed to buoy stocks. The yield on the benchmark 30-year Treasury bond fell 5 basis points to 7.08 percent.

Helping depress stocks was news that the flow of money into mutual funds slumped to $2.2 billion in the latest week from about $5.7 billion in the prior week.

Pub Date: 6/15/96

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