Stocks fall in year's slowest trading Market down 31 points, as NationsBank deal contributes to decline

August 31, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks fell yesterday in the slowest day of trading all year.

NationsBank Corp. led the retreat after it agreed to buy Boatmen's Bancshares Inc. at a price many investors considered too high.

The Dow Jones industrial average slid to 5,594.01, before rebounding to 5,616.21, down 31.44. With Thursday's 64.73-point drop, the average's two-day decline is 1.7 percent.

In August, the Dow industrials managed a 1.9 percent gain, including reinvested dividends. The Standard & Poor's 500 index rose 2.1 percent. The Nasdaq composite index, which suffered the worst losses in July, made the best gains in August, up 5.7 percent.

Yesterday, the S&P 500 slumped 5.41 to 651.99, led lower by housing and homebuilding shares, whose business would be trimmed by higher borrowing costs. Centex Corp., a real estate construction company, dropped 75 cents to $32.125.

The Nasdaq index fell 6.03 to 1,139, then recovered to a 3.53-point loss to end at 1,141.50.

The Russell 2,000 index of smaller shares rose 5.9 percent for the month to 334.51. And the Wilshire 5,000 index -- a gauge of shares listed on the NYSE, the American Stock Exchange and the Nasdaq stock market -- gained 3 percent. The American Stock Exchange market value index fell 1.66 to 559.68, and the S&P midcap index dropped .64 to 232.13.

Only 258 million shares changed hands, the slowest for a full session since Dec. 26.

Declining shares outnumbered those that advanced by 1,457 to 829 on the New York Stock Exchange.

Pulte Corp., a home builder and financier, lost 50 cents to $24.875. Fleetwood Enterprises Inc. retreated 50 cents to $27.75.

NationsBank offered $55.70 a share for Boatmen's, a 30 percent premium to Boatmen's $42.9375 closing price yesterday, and about 2.6 times assets. That boosted Boatmen's shares, but NationsBank slid to its worst one-day decline in six years after a Salomon Brothers Inc. analyst estimated the buyout could reduce NationsBank's stated earnings by $245 million annually.

In another bank merger, Walden Bancorp. rose $7.75 to $28.25 after UST Corp. said it would pay $30.875 a share, or about $161 million, in stock for the Acton, Mass., savings and loan.

August has been the second best month this year for mergers and acquisitions, according to Securities Data Co., with $61 billion in announced transactions including NationsBank's purchase yesterday. Some $28 billion in agreements were signed this week.

The yield on the benchmark 30-year Treasury bond rose 9 basis points yesterday to 7.12 percent.

Johnson & Johnson, maker of Band-Aid adhesive strips, dropped 62.5 cents to $49.25, its fifth retreat in six days. Coca-Cola Co. slid 37.5 cents to $50.

Drugmaker Merck & Co. fell 87.5 cents to $65.625.

Rival Eli Lilly & Co. dipped $1 to $57.25.

Big gainers included automaker Chrysler Corp., up 87.5 cents to $29.25, and rail-freighter CSX Corp., up 62.5 cents to $50.625. Asarco Inc., one of the biggest metal producers in the U.S., rose 37.5 cents to $25.875.

Dell Computer Corp. received a boost after Standard & Poor's said its shares would be added to the benchmark S&P 500 index Sept. 5. The direct-order personal computer maker rose 50 cents to $67.125. Stocks added to the S&P 500 often rise because investors who simply wish to mimic the index's performance must buy them.

Dell replaced Varity Corp., a car and truck parts builder that agreed to be merged with Lucas Industries PLC earlier this year. Varity fell $2 to $50.25.

In another auto parts merger, Douglas & Lomason Co. jumped $4.50 to $30.625 after Canadian Magna International Inc. said it will buy the maker of vehicle interiors for about $135 million.

Markets will be closed Monday.

Pub Date: 8/31/96

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