Stocks tumble Dow falls 49 points

Computer, retail shares help depress indexes

Nasdaq drops 1.56%

September 06, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks tumbled yesterday, led by slumping computer-industry and retail shares, as concern grew that rising borrowing costs will trim corporate profits.

The Dow Jones industrial average dropped 49.94 to 5,606.96, its biggest drop in a week and its lowest close since Aug. 1.

In the broader market, the Standard & Poor's 500 index dropped 6.17 to 649.44, its lowest close since July 31.

The Nasdaq composite index fell 18.16, or 1.56 percent, to 1,125.66. The index was hurt by its large membership of computer-industry stocks. A series of small computer-industry companies including Zilog Inc. and Hutchinson Technology Inc. warned of weaker sales and profits.

The Russell 2,000 index of smaller shares fell 2.97 to 331.59; the Wilshire 5,000 slipped 60.14 to 6,394.66; the American Stock Exchange market value index slid .63 to 556.71; and the S&P midcap index lost 2.21 to 229.92.

Declining stocks outnumbered gainers on the New York Stock Exchange by 1,617 to 776. About 361 million shares changed hands, up from 351 million yesterday.

Shares of most retailers fell back yesterday after a strong rally Wednesday.

Gap Inc., a clothing retailer, had the worst showing after it unexpectedly reported unchanged sales in August, its worst monthly performance since last August. Gap, down $4.875 to $29, bucked generally improved monthly sales for stores open more than a year.

Sears Roebuck & Co. shares skidded after rising $1.125 Wednesday, as the company said sales in U.S. stores rose 4.4 percent. J. C. Penney Co., whose sales rose 7 percent, dropped 62.5 cents to $54.875.

The yield on the benchmark 30-year Treasury bond, which helps set borrowing costs for the private sector and moves opposite the price, jumped 5 basis points to 7.15 percent.

J. P. Morgan & Co. dropped $1.625 to $87 amid higher bond yields. Chase Manhattan Corp. dropped 75 cents to $73.875. NationsBank Corp. fell $1.75 to $82.

Among computer-industry laggards, Hutchinson Technology, a maker of computer disk drive assemblies, dropped $5.015625 to $34. The company said it is only breaking even in its current quarter.

Macromedia Inc., a multimedia software firm, sank after the company said earnings could fall 10 percent from the previous quarter ended in May and analysts cut their investment rating. Its shares dropped $3.6875 to $19.125.

Zilog slid $8.125 to $15.75 after the specialty chip maker said a slowdown in sales of modem chips would hurt third-quarter earnings. The poor performance dragged down shares of U.S. Robotics Corp., the top modem seller, $2.3125 to $47.375.

Dell Computer Corp. retreated $1.125 to $67.75; International Business Machines Corp. dropped $1.50 to $113.125; and Compaq Computer Corp. slid 37.5 cents to $56.75.

Hewlett-Packard Co. dropped $1.25 to $43. The personal computer and printer maker was stung by news that rival printer maker Lexmark International Inc. is forming a marketing alliance with Polaroid Corp. to beef up its color printer product line.

Still, Lexmark fell 93.75 cents to $16.875. Polaroid was unchanged at $42.75.

International Rectifier Corp. shares sank $3.375 to $14.625 after one analyst cut his earnings estimates at the semiconductor company for the next two years and another cut his investment rating.

Kellogg Co. said it expects to report 20 percent thinner profit than in the same quarter last year because of lower cereal prices. The stock rose $1.375 to $67.375 yesterday, after falling $3.375 in daytime and after-hours trading Wednesday.

Forest Laboratories Inc. retreated after the pharmaceutical company said price competition was slashing revenues and market share for its drug lines. Forest Labs fell $6.75 $to 33.375.

Pub Date: 9/06/96

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