As bonds decline, U.S. stocks stumble Dow Jones average falls more than 10 points amid fears of inflation

August 24, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks retreated yesterday as Treasury bonds suffered their worst decline since July 5, driving down bank and other financial issues.

The Dow Jones industrial average slipped 10.73 to 5,722.74, after unexpectedly strong factory orders for durable goods in July fanned concern that inflation will quicken, sending bond yields to their highest point this month.

J. P. Morgan & Co., Minnesota Mining & Manufacturing Co. and Exxon Corp. led the Dow's decline, trimming its gain for the week to 33.29 points, or 0.59 percent. On Thursday, the 30-stock average closed just 44.53 points below its May record.

The broader market saw a larger percentage loss yesterday, with the Standard & Poor's 500 index, representing three-quarters of the value of all U.S. stocks, falling 3.65, or 0.54 percent, to 667.03. For the week, the index gained 0.27 percent. Oil stocks joined banks in falling the most yesterday.

The Nasdaq composite index slipped 0.91 to 1,143.05 as Intel Corp. and Microsoft Corp. both declined. The Nasdaq beat the performance of the Dow industrials and the S&P 100 this week, rising 0.83 percent.

The Russell 2,000 index of small companies rose 0.36 to 331.77; the Wilshire 5,000 index of the largest companies on the New York and American stock exchanges and the Nasdaq stock market fell 22.65 to 6,529.18; the S&P midcap 400 index dipped 0.39 to 232.84; and the American Stock Exchange market value index rose 0.62 to 560.94.

More than six stocks fell for every five that rose on the New York Stock Exchange, where volume totaled 309 million shares.

Investors reacted to a slump in Treasury bonds that drove up yields on benchmark 30-year bonds to 6.95 percent, the highest since July 31, from 6.83 percent Thursday.

Chase Manhattan Corp. slumped $1.25 to $78.125; BankAmerica Corp. fell $1.50 to $82.25; J. P. Morgan skidded 87.5 cents to $91.375; PNC Bank Corp. fell 75 cents to $32; First Union Corp. retreated 62.5 cents to $65.50; and NationsBank Corp. declined 50 cents to $93.375.

Other financial stocks were pulled down in the bonds' whirlpool. American International Group Inc. dropped $1.375 to $99; General Re Corp. fell $1.625 to $149.25; Cigna Corp. slid $1.75 to $118.625; and Cincinnati Financial Corp. dropped $1 to $55.50.

Federal Home Loan Mortgage Corp. skidded $1.875 to $90.125.

Exxon fell $1.125 to $82.50, Mobil Corp. dropped 87.5 cents to $114.125, and Texaco Inc. slipped 87.5 cents to $90.25 as Texas crude oil for October delivery fell 34 cents a barrel to $21.96, and as their fat dividends grew less attractive once bond yields rose.

Drugmakers slumped. American Home Products Corp. dropped 75 cents to $59.625; Johnson & Johnson fell 87.5 cents to $51.125; and Merck & Co. sank 75 cents to $68.125.

Morgan Stanley's index of 30 stock consumer stocks, such as Gillette Co., fell 0.53 percent, while its index of 30 cyclical businesses, such as Georgia-Pacific Corp., dropped just 0.06 percent.

Novell dropped 75 cents to $11.125 after the publisher of computer networking software said late yesterday that fiscal third-quarter net income dropped to 17 cents a share from 27 cents in the year-earlier period.

Among the day's biggest winners and losers, Bay Networks Inc. leaped $1.875 to $27.125 amid speculation that the networking equipment maker would be bought by Lucent Technologies Inc. Lucent dropped 25 cents to $37.375.

Paper stocks rallied as Goldman Sachs & Co. began research coverage of both Georgia-Pacific Corp., up $1.625 to $77.875, and Willamette Industries, ahead $1.375 to $65, with "buy" recommendations, and added both to its "recommended-for-purchase" list.

Midcom Communications Inc. rallied $1.50 to $13.375 after Wheat First Butcher Singer added the company to its "single best idea" list of stocks.

Pub Date: 8/24/96

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.