Stocks fall a 2nd day as T-bond yields rise Multinationals hurt by dollar's strength

Dow index off 19.75

December 05, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks slid for a second day yesterday, hurt by rising Treasury bond yields that drove down financial issues such as NationsBank Corp.

At one point, the Dow Jones industrial average slumped 74.91. The 30-stock benchmark rebounded late in the day to close down 19.75 at 6,422.94, capping the worst two-day stretch since late August.

The dollar's recent strength against the German mark punished multinational companies such as Pfizer Inc., down $1.625 to $84, and Gillette Co., $2 lower at $70.875, that earn much of their profits outside the United States.

In the broad market, the S&P 500, representing three-quarters of the value of all U.S. stocks, finished down 3.18 to 745.1 after falling 9.82. The Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, plunged 30.74 to 7,219.72.

The Nasdaq composite index fell 3.35 to 1,297.02, ending a streak of seven consecutive closing records.

The Russell 2,000 index of small capitalization stocks gained 0.27 to 358.10; the American Stock Exchange market value index lost 3.19 to 588.99; and the S&P midcap index lost 1.54 to 255.77.

About seven stocks fell for every five that rose on the NYSE. Volume totaled 498.2 million shares, above this year's average of 408.5 million.

Yields on benchmark 30-year Treasuries rose to 6.39 percent. It finished at 6.36 percent Tuesday after reaching a 10-month low of 6.31 percent early in the day.

Golden West Financial Corp., a California savings and loan, skidded $1.25 to $64.125; Household International Inc., a consumer lender and large issuer of credit cards, slumped $1.50 $91.50; and Federal National Mortgage Association, a mortgage lender, slid $1.125 to $38.

Among regional banks, Nor-west Corp., based in Minneapolis, dropped $1.125 to $44.25; North Carolina's First Union Corp. fell $1.75 to $73.25; and NationsBank Corp. declined $2.109375 to $97.890625.

DuPont Co., down $2.125 to $96, and United Technologies Corp., $2.25 lower at $134.25, lost the most among the Dow industrials.

Drug companies, among this year's largest gainers, saw some of the day's biggest declines.

American Home Products Corp. fell $1.375 to $63, bringing its year-to-date advance to 30 percent. Bristol-Myers Squibb Co. fell $1.875 to $113.375, trimming its gain for the year to 32 percent and Eli Lilly & Co. dropped $1.125 to $74.75, paring its 1996 gain to 33 percent.

Forest Laboratories Inc. dropped $9.375 to $29.375 after the maker of generic and branded drugs said it expected to report losses from operations in the next two quarters because it eliminated customer incentives.

New York-based Forest was also downgraded to "neutral" from "buy" and "outperform," respectively, at Cowen & Co. and Morgan Stanley & Co.

Canada's Biovail Corp. fell $1 to $26.75 in the United States. Forest Labs is a major customer of Biovail's.

Other big losers included Flextronics International Ltd., which tumbled $9 to $28.25. The San Jose, Calif.-based contract manufacturer of electronic products expects to be only "modestly profitable" in the next six months, and said it would take a charge of as much as $7 million to fire workers in Singapore and close a plant in Texas.

Intel Corp. rallied $3.625 to a record $129.50. Soundview Financial Group raised this year's earnings estimate 3 percent to $5.52 a share, raised next year's forecast 13 percent to $7.92 and raised its price target for the stock to $150 a share from $140.

Baxter rose 50 cents to $41.50.

GT Interactive Software, maker of the "Mortal Kombat 3" video game, dropped $4.75 to $7.875 in trading of more than 8.23 million shares after disclosing late Tuesday that its fourth-quarter sales and earnings will fall below estimates because of sluggish holiday sales.

Pub Date: 12/05/96

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