Offsetting forecasts spur mixed close Cyclical stocks fall

bright earnings view lifts others

June 26, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks were mixed yesterday as auto and paper issues retreated on concern earnings will fall short of analyst estimates, and Johnson & Johnson and Merck & Co., whose profits aren't so dependent on a buoyant economy, rose.

Reports showing meager growth in U.S. home sales and waning consumer confidence in the economy's prospects hurt shares of companies whose products sell best when businesses and shoppers think they'll have more money to spend tomorrow than they have today.

The Standard & Poor's 500 index fell 0.37 to 668.48, snapping a three-day advance. The Nasdaq composite index skidded 10.32 to 1,172.58, its seventh drop in nine days. The index is now down 5.1 percent since June 12.

Among auto shares, General Motors Corp. slid $1.25 to $53.125; Chrysler Corp. slumped $2.625 to $63.625; and Ford Motor Co. lost 62.5 cents to $32.75.

The Dow Jones industrial average managed a fifth day of gains, rising 1.48, to 5,719.27, after being down most of the day. The 30-stock average has risen 91.24 points, or 1.6 percent, since June 18. International Paper Co. and DuPont Co. fell. Procter & Gamble Co. and Boeing Co. gained.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks fell 2.38, to 344.44; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 9.91, to 6,587.11; the American Stock Exchange market value index fell 3.40, to 581.74; and the S&P 400 midcap index slipped 1.08, to 234.09.

About 1,311 shares fell and 1,099 rose on the New York Stock Exchange, where 391.9 shares changed hands. The three-month daily average volume on the Big Board is about 404 million shares. Yesterday's most active stocks in U.S. composite trading were Iomega Corp., 3Com Corp., ValuJet Inc., Portland General Corp. and Cisco Systems Inc.

Concern that the economy has lost steam was fueled by the Conference Board's index of consumer confidence, which fell to 97.6 percent in June from a revised 103.5 in May.

The yield on the benchmark 30-year Treasury bond fell to 7.04 jTC percent from 7.08 percent yesterday.

So-called cyclical stocks -- shares of companies whose earnings rise and fall with the economy's health -- were among the biggest losers. The Morgan Stanley cyclical index dropped 4.09, to 370.48, as International Paper fell $1.375, to $38.375, and Georgia-Pacific Corp. slumped $2.125, to $74. Hewlett- Packard Co. fell $2.25, to $95.875, and building products company Masco Corp. dropped 62.5 cents, to $29.625.

The Keefe, Bruyette & Woods index of 24 bank stocks rose 2.74 to 431.50. Among bank shares, Citicorp rose 62.5 cents, to $82.25; Chase Manhattan Corp. rose $1.375 to $70.125; First Bank Systems Inc. gained 62.5 cents, to $58.125; and NationsBank Corp. rose 87.5 cents, to $81.

Shares of health and drug companies gained from expectations that their earnings will match or exceed estimates no matter how the economy fares.

Bristol-Myers Squibb Co. rose $1, to $89.125; Johnson & Johnson jumped $1, to $49.375; American Home Products Corp. gained 50 cents, to $59.50; Merck rose 87.5 cents, to $65; and Pfizer Inc. climbed $1, to $74.

Shares of 3Com Corp. fell $4.8125, to $45.8125, giving back its gains of the last two days. The computer networking company's fiscal fourth-quarter profit from operations of 46 cents a share failed to exceed expectations.

For a second day, shares of companies that make products for or provide access to the Internet gained. Yesterday, Lauren Rich Fine, an analyst at Merrill Lynch & Co., said the 40 percent drop in America Online Inc.'s stock since May 7 is overdone.

America Online rose 37.5 cents, to $42.50, even after the company said President and Chief Operating Officer William Razzouk had resigned after four months at the No. 1 online service. Netscape Communications Corp. jumped 50 cents, to $58.75.

Pub Date: 6/26/96

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