Blue chips fall traders worry over growth

Concern is that revenue rise is slowing at top consumer companies

April 18, 1997|By BLOOMBERG NEWS

NEW YORK -- Blue-chip stocks fell yesterday as investors grew concerned that revenue growth at the nations' biggest consumer companies is slowing.

Procter & Gamble Co. and Sears, Roebuck & Co. led the Dow Jones industrial average lower, after Gillette Co. said revenue grew just 6 percent and Kimberly-Clark Corp. reported 1 percent sales growth.

"We're concerned," said Bob Streed, a money manager at Northern Trust Co., which oversees $130 billion and owns Gillete and Kimberly-Clark shares. "A lot of the earnings gains we've seen may have come from cost-cutting, and these companies are running out of costs to cut."

The Dow industrials fell 21.27 to 6,658.60, after rising 33.72.

Contributing to the decline, Sears fell $2 to $46.75 after the retailer was named in a complaint by the U.S. Attorney's Office in Boston. The complaint seeks unspecified penalties and

restitution for customers who kept paying their credit-card bills after bankruptcy court wiped out their debts.

The Standard & Poor's 500 index fell 1.76 to 761.77.

The Nasdaq composite index bucked the trend, helped by Intel Corp., up $4 to $138. After falling for three days, the Nasdaq

gained 6.80 to 1,217.07, as Compaq Computer Corp. and Dell Computer Corp. predicted strong demand for personal computers.

In another optimistic sign for computer-related shares, Microsoft Corp. reported earnings that beat forecasts after the market closed, and its shares rose $4.875 to $103 in after-market trading.

On the broader market, the Russell 2,000 index of small capitalization stocks gained 0.19 to 340.43; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, fell 9.43 to 7,233.56; the American Stock Exchange composite index slid 0.99 to 555.52; and the S&P midcap index added .52 to 2.51.99.

The yield on the benchmark 30-year Treasury Bond fell 3 basis points to 7.06 percent.

Philip Morris Cos., the world's largest cigarette company, fell $1.625 to $41.625. Standard & Poor's Ratings Services said it may cut its ratings on debt issued by tobacco companies or their units amid concern that the cost of lawsuits against the industry could hurt the companies' ability to pay back bondholders. On Wednesday, shares soared on news that the tobacco companies are in talks with government officials on ending litigation.

Tempering the market's losses, banks like J. P. Morgan & Co. and NationsBank Corp. gained as government reports suggested the economy is slowing enough to keep inflation and higher interest rates at bay. J. P. Morgan rose 75 cents to $97.25 and NationsBank climbed 25 cents to $55.75.

Among companies that beat earnings forecasts, Cyrix Corp. gained 43.875 to $21.625 after the chip maker reported net income of 33 cents a share, 24 cents ahead of expectations.

Bankers Trust New York Corp. rose 50 cents to $75.50 after reporting net income of $1.89 a share, 5 cents better than forecasts.

Bank of Boston Corp. jumped $2.375 to $66 after reporting first-quarter profit that matched Wall Street expectations.

Shares of Gillette Co. fell $3.25 to $78.625, after the consumer products company said first-quarter revenue was lower than expected.

While earnings, up 14 percent, matched expectations, analysts were concerned about falling sales and profit at its Braun products unit, which makes electric razors and coffee makers.

Kimberly-Clark, which makes Kleenex tissues and Cottonelle toilet paper, slid $1 to $49. The company said competition from lower-priced goods hurt profit in Mexico in the wake of the 1994 peso devaluation and cited declining demand for Kimberly's industrial-tissues products.

Earnings rose 16 percent, matching expectations.

Pub Date: 4/18/97

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