Stocks pull back from records Dow industrials lose 11 points, to 6,418

Alcoa and Coke drop

November 22, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks declined from records yesterday amid concern that share prices are higher than justified by prospects for corporate earnings. Aluminum Co. of America and Coca-Cola Co. led the decline.

The Dow Jones industrial average fell 11.55 to 6,418.47, spurred by Alcoa's drop of $1.125 to $62.375. The broader Standard & Poor's 500 index fell 1.20 to 742.75, and the Nasdaq composite index dropped 6.86 to 1258.08.

Among broad U.S. stock indexes, the Russell 2,000 index of small capitalization stocks slid 0.35 to 347.18; the Wilshire 5,000 index, made up of stocks on the New York, American and Nasdaq stock exchanges, fell 18.2 to 7156.65; the American Stock Exchange market value index climbed 0.57 to 587.76; and the S&P 400 mid-cap index dropped 1.21 to 252.39.

Maryland stocks fell, led by Giant Food Inc.'s Class A shares, which dropped $1.625 to $34, and Petroleum & Resources Corp., which lost $1.50 to $34.25.

The most active stocks in U.S. trading were Intel, Applied Materials Inc., Integrated Device Technology Inc., Microsoft Corp. and Olsten Corp.

Health care shares rallied. Bausch & Lomb Inc., which makes contact lenses, rose $2.25 to $35.50 on speculation that the company could be the target of a $48-a-share bid from Johnson & Johnson.

Johnson & Johnson rose 75 cents to $52.125. Among drug stocks, Bristol-Myers Squibb Co. rose $1 to $110.25. Eli Lilly & Co. rose 87.5 cents to $74.375 after Smith Barney reiterated its designation of the stock as a "buy."

Semiconductor and software stocks fell, after an advance that sent the Morgan Stanley High Tech Index up 10 percent this month. Intel Corp. dropped $2 to $118.875; Motorola Corp. fell $1 $53.875; and Microsoft lost $2.875 to $150.375.

An IBES International Inc. survey shows that analysts expect earnings of "technology" companies -- makers of software, semiconductors, computers and telecommunications equipment -- to grow 29.9 percent next year, outperforming all other industry groups.

Coca-Cola shares fell $1 to $50.625 amid concern that a remark from Chairman Roberto Goizueta about the company's earnings was a warning about profit. Goizueta said in a Chicago speech yesterday that he expects operating income of about $4 billion in 1996.

That figure is lower than last year's $4.18 billion. A Coke spokesman said Goizueta used the figure as an approximation to answer a question, not make a forecast.

PepsiCo Inc. slipped $1.125 to $30.375 after analyst Jennifer F. Solomon at Salomon Brothers lowered her fourth-quarter estimate for the beverage maker by 3 cents to 30 cents a share and her 1997 forecast by 3 cents to $1.43.

Among gainers in the Dow average, Boeing Co. gained $1.125 to $97.50 after it said AMR Corp.'s American Airlines ordered 103 planes with a list price of $6 billion, with options to buy 527.

Delta Air Lines Inc. yesterday said that it eliminated McDonnell Douglas as a candidate to supply as many as 27 big jetliners representing $3 billion in potential business. That contract will now go either to Boeing or to Europe's Airbus Industrie. McDonnell Douglas shares fell 12.5 cents to $53.

Marvel Entertainment Group Inc. shares fell 37.5 cents to $2.50. Bondholders said they were told by Marvel's biggest shareholder that the company will run out of cash in three weeks and needs $15 million immediately to pay its bills.

Olsten shares fell $5.375 to $14.50 after the company said it expects to post lower-than-expected fourth-quarter earnings.

Diana Corp. shares slipped 87.5 cents to $36 after the company approved plans to break up into two separately traded companies -- a maker of telecommunications equipment and a distributor of telecommunications equipment and food.

The 30-year bond's yield was unchanged at 6.41 percent yesterday.

Pub Date: 11/22/96

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