Stocks tumble to 6-month nadir Concern over pending slump in computer industry tackles market

July 24, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks fell to their lowest point in almost six months as computer-industry stocks slumped on concern that the pace of business may slow as the year wears on. Microsoft Corp. and Intel Corp. led the decline.

While Microsoft's fiscal fourth-quarter earnings topped estimates, its software sales were aided by aggressive price zTC cuts in the personal computer industry. Some investors said that suggests demand may be wavering.

The Dow Jones industrial average fell 44.39, to 5,346.55, after rising as much as 43.28 points earlier. The 30-stock average closed at its lowest level since it hit 5,304.98 Jan. 29.

The Nasdaq composite index, filled with computer, software and semiconductor issues, tumbled 32.32, to 1,049.07. The index is now down more than 16 percent from its intraday record 1,254.12 June 6. The Standard & Poor's 500 index fell 6.09, to 626.87, after rising 3.93 points. Both indexes were at their lowest since Jan. 29.

The Russell 2,000 index of small capitalization stocks fell 5.93, to 311.72; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, dropped 78.17, to 6,131.22; the American Stock Exchange market value index fell 6.01, to 536.96; and the S&P 400 midcap index slid 3.52, to 215.92.

Yesterday's most active stocks in U.S. composite trading were Iomega Corp., Microsoft, Intel, Cisco Systems Inc. and Sun Microsystems Inc.

Declining stocks outnumbered advancers by 1,696 to 709 on the New York Stock Exchange, where 421.9 million shares traded. The three-month daily average is 403.4 million shares.

Shares of Microsoft fell $7.625 to $112.125, their lowest since July 15, even after the company's fiscal fourth-quarter profit of 87 cents a share beat estimates by 3 cents. The world's largest maker of personal computer software told analysts it may defer into fiscal 1998 the revenue from Office 97, a hot product set for release this year.

Computer stocks fell. Compaq Computer Corp. fell $2.125, to $45, and Hewlett-Packard Co. slumped $2.25, to $41. International Business Machines Corp. dropped $2.25, to $90.25, and Digital Equipment Corp. lost 62.5 cents, to $31.875.

The Philadelphia semiconductor index dropped 4.77, to 145.20. Among the losers, Intel fell $2.75, to $69.50; Motorola Inc. dropped 75 cents, to $52.875; Micron Technology Inc. slid $1, to $17.25; and Texas Instruments Inc. fell $1.625, to $41.75.

Drug shares fell back. On Monday, the S&P drug index rallied 23.01, to 2,371.45, after Bristol-Myers Squibb Co. and Warner-Lambert Co. posted increases in second-quarter earnings that matched or exceeded expectations. Yesterday, the index fell 46.47, to 2,324.98.

Eli Lilly & Co. fell $1.625, to $56.50; Pfizer Inc. dropped $1.375, to $71.50; and Merck & Co. fell $2, to 463.625.

American Home Products Corp. fell 25 cents, to $56, after losing a gain of $1.50. The company said second-quarter earnings jumped 30 percent on stronger U.S. drug sales. Net income of 62 cents a share topped estimates of 60 cents.

AlliedSignal Inc. was the Dow industrials' biggest gainer, rising $1.875, to $57.75. On Monday, the aerospace and automotive company said second-quarter earnings rose 16 percent and that it would fire 3,000 employees.

One of the biggest winners in the S&P 500 index was PepsiCo Inc., which jumped 37.5 cents, to $33.25. The beverage and food company said second-quarter profit rose 17 percent.

Shares of UAL Corp., the parent company of United Airlines, jumped $2.625, to $47.875. The company reported fully distributed profit from operations of $337 million, or $2.52 a share, above the $2.04 a share analysts expected.

Shares of American Express Co. rose 50 cents, to $41.375. The travel and finance company said its second-quarter earnings rose to 93 cents a share from 81 cents in the year-ago quarter.

Pub Date: 7/24/96

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