Dow closes under 7,000 Market retreats amid doubts shares can go much higher

February 15, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks retreated from records yesterday as investors reappraised whether a 2-year-long rally has thrust stocks to unsustainable levels, given that earnings aren't expected to boom and interest rates probably won't tumble.

The Dow Jones industrial average fell 33.48 to 6,988.96, after closing above 7,000 Thursday for the first time.

It was the first drop in four days. Leading the decline, Caterpillar Inc. slid $3.375 to $79.75 and DuPont Co. dropped $2.625 to $109.625.

The Dow, which is up more than 80 percent since November 1994, gained 133.16 points, or 1.9 percent, for the week.

Royal Dutch Petroleum Co. fell $2.875 to $180.125 yesterday after Merrill Lynch & Co. cut its investment recommendation on the oil company's stock. Analyst Constantine Fliakos told clients the stock isn't as attractive as it once was because it trades near its all-time high and he expects crude oil prices to drop.

Chevron Corp. fell 50 cents to $68.375; Mobil Corp. dropped 12.5 cents to $131.50; and British Petroleum Co. gave up 25 cents to $133.875.

The Standard & Poor's 500 index also slid for the first time in four days, dropping 3.34 to 808.48 after setting a record for the past two days.

The Nasdaq composite index, which jumped more than 25 percent in the last year, fell 3.62 to 1,367.19, as Microsoft Corp. slipped $2.125 to $97.875.

Some 1,345 stocks rose and 1,219 fell on the New York Stock Exchange, where 491.5 million shares changed hands. The three-month daily average volume on the Big Board is 476.6 million shares.

Helping prop up stocks were more signs that inflation remains tame.

The Labor Department said prices paid to U.S. factories, farms and other producers fell an unexpected 0.3 percent in January.

Excluding food and energy, prices were unchanged from a month earlier.

The yield on the benchmark 30-year Treasury bond fell 11 basis )) points to 6.53 percent, helping financial stocks.

Citicorp climbed $2.75 to $126.25; Chase Manhattan Corp. gained 75 cents to $101.625 and NationsBank Corp. rose $2 to $119.75.

Merrill Lynch's stock rose 12.5 cents to $96.625 after Richard Strauss, an analyst at Goldman, Sachs & Co., raised his investment opinion on the shares.

Winthrop Resources Corp. gained 37.5 cents to $34.375 after TCF Financial Corp., one of the largest thrifts in the United States agreed to acquire the Minneapolis-based company for $326 million in stock. TCF's shares dropped 62.5 cents to $46.50.

Among the day's most active issues was Hewlett-Packard Co., which dropped 25 cents to $50.375 in trading of 3.67 million shares. The company unveiled price cuts in network adapter cards, putting further pressure on a key product line in the computer networking industry.

Intel, the No. 2 maker of the cards after 3Com Corp., fell $2.50 to $154.50. Wind River Systems Inc. rose $4.875 to $48 after the software company declared a 3-for-2 stock split.

Shares of AMR Corp., American Airlines' parent company, dropped $1.25 to $81.875 after making little progress to avert a pilots' strike.

Delta Air Lines Inc. fell $1 to $84.875; United Airlines' UAL Corp. dropped $1.50 to $60.375; Northwest Airlines Corp. fell 62.5 cents to $35.75; and Southwest Airlines Co. dropped 25 cents to $23.875.

Pub Date: 2/15/97

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