Stock slide halts amid erratic trading Bonds rally, Dow gains 1.16, but most indexes still lose ground

December 14, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks yesterday halted the worst two-day decline since mid-July, but trading was mixed as Intel Corp. retreated from a record and Treasury bonds rallied for the first time since Monday.

At one point during the day, the 30-stock Dow Jones industrial average fell 52.30 points. At another, it climbed 40.74. In an unusually erratic day marked by almost a dozen series of computer-guided "buy" and "sell" orders, the benchmark average finally closed 1.16 higher at 6,304.87, bringing the week's loss to 77.07, or 1.2 percent.

"The American market is high, and accordingly is vulnerable," said Jean-Marie Eveillard, president of Societe Generale Asset Management, who oversees $5 billion in assets. Investors in November expected "permanent paradise," he said, so prices now are "vulnerable to any bad news."

Stocks soared 8.2 percent in November, only to fall 3 percent so far in December. Such swings make investors skittish and less willing to pay high prices.

Investors faced another day of adverse earnings announcements.

Oracle Corp., the fourth largest stock on the Nasdaq stock market, was the latest casualty of investors' disappointment. The maker of database software slid $3.25 to $44 after reporting weaker than expected second-quarter sales in Europe and was the most active stock in the United States as 25 million shares changed hands.

Intel, the second-most-active stock, tumbled $4.50 to $132.375. It closed at a record $136.875 Thursday.

In the broad market, the Standard & Poor's 500 index dropped 7.42 before closing at 728.64, down 0.69, as almost three stocks fell for every two that rose on the New York Stock Exchange. Big Board volume swelled to 454.5 million shares from this year's average 410.1 million.

The Nasdaq composite index slid 16.9 before recovering to 1,284.91, down 13.42; the Russell 2,000 dropped 2.2 to 354.18; the Wilshire 5,000 index lost 18.88 to 7,072.70; the American Stock Exchange market value index dumped 3.05 to 576.06; and the S&P midcap index slid 1.51 to 249.64.

The early decline in the Dow triggered the New York Stock Exchange's "uptick" rule, a measure intended to curb some computer-guided trading, for the seventh time in as many days.

"You're having this tug of war, this little bit of schizophrenia here," said Benedict Capaldi, a money manager at Provident Capital Management, with $4 billion in assets. "Right now, the pros are looking for reasons to be nervous. Individual investors have learned that you buy the dips."

The yield on the benchmark 30-year Treasury bond slid to 6.57 percent after jumping as high as 6.66 percent, from 6.62 percent Thursday.

Among most active stocks, Philip Morris Cos., maker of Marlboro cigarettes, skidded $2.25 to $111.50 on news that a Florida judge allowed the state to add a racketeering claim in its lawsuit against the tobacco industry, raising the potential for higher damages. RJR Nabisco Holdings Corp., maker of Camel and Salem cigarettes, dropped 62.5 cents to $32.875.

Federal Express Corp. gained $1.50 to $41.625. The package delivery service's fiscal second-quarter earnings rose 15 percent, in line with expectations.

Galoob Toys Inc. sank $2.75 to $20.125. Analysts tied the decline speculation that the company may not be awarded a license for a new round of Star Wars toys.

Pub Date: 12/14/96

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