NEW YORK -- U.S. stocks fell yesterday on concern that shares have risen faster than justified by the outlook for profits.
"Everybody's anxious, and the market is going to reflect the most recent news," said Gary Campbell, chief investment officer at Kansas City-based Commerce Bank, which oversees $7 billion.
Investors seemed preoccupied with warnings from Delta Air Lines Inc. and other companies that third-quarter profits will be lower than expected.
The Dow Jones industrial average fell 63.35 to 7,906.71. The Dow is 4.3 percent below its Aug. 6 record of 8,259.31, though it's still up 23 percent for the year.
Brokerage stocks such as Donaldson, Lufkin & Jenrette Inc. rallied after Travelers Group Inc.'s $9 billion agreement to buy Salomon Inc. Travelers fell $2.65 to $69.8125, leading the decline in the Dow.
Stocks rose in early trading on optimism sparked by falling bond yields, then slumped after noon.
At the close, the Standard & Poor's 500 index had fallen 7.45 to 944.48 and the Nasdaq composite index had lost 9.95 to 1,687.41.
Among broad market indexes, the Russell 2,000 index of small capitalization stocks fell 0.84 to 448.58, ending a string of eight records; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, slumped 26.70 to 9,195.63; the American Stock Exchange composite index lost 0.62 to 686.07; and the S&P 400 mid-cap index slid 1.69 to 329.57.
Travelers' agreement to buy Salomon highlighted the acquisition wave sweeping Wall Street. Salomon jumped $4.75 to $76.25.
Donaldson, Lufkin & Jenrette rose $2.125 to $66.0625; A. G. Edwards & Sons Inc. gained $2.4375 to $48.875; Bear Stearns Cos. rose 43.75 cents to $43.1875; Lehman Brothers Holdings Inc. gained 75 cents to $49.375; Merrill Lynch & Co. rose 87.5 cents to $71.4375; and PaineWebber Inc. jumped $1.1875 to $43.8125.
Bankers Trust New York Corp., a commercial bank that rose 11 percent last week on speculation that Travelers was considering a bid for it, fell $1.875 to $122.3125.
In another acquisition announcement, Tejas Gas Corp. soared $9.8125 to $59.8125 after Shell Oil Co. agreed to buy the natural gas company for $61.50 a share, or $1.45 billion, in cash, and assume $900 million in debt and preferred stock.
Most large computer-related companies fell, with Intel Corp. dropping $3.50 to $95.625 and Microsoft Corp. losing $3.0625 to $132.4375.
Advancing and declining stocks were even at about 1,450 each on the New York Stock Exchange. The volume of 645 million shares, made yesterday the seventh-busiest day in exchange history; daily volume has averaged 508 million over the past six months.
The yield on the 30-year bond fell 7 basis points to 6.31 percent.
Banks, which enjoy fatter profit margins when rates fall, benefited.
NationsBank Corp. gained $1.125 to $63.1875. Barnett Banks Inc. rose $1.875 to $72.9375 after the company said it expects earnings excluding a charge to be consistent with analysts' expectations for 82 cents a share.
Aetna fell $1.0625 to $92.625, after falling 8.8 percent Tuesday amid concern that its profit will be disappointing. The company is expected to report earnings Nov. 4.
3Com Corp. rose 56.25 cents to $52.5625, and was the most active stock in U.S. trading, after the computer networking company reported profit before a charge for its first quarter ended Aug. 31 of 48 cents a share, matching the average analyst estimate. 3Com rose $1.625 to $52 Tuesday ahead of the news.
Gucci Group NV fell $11.25 to $47 after the Italian apparel company said economic troubles in its largest Asian markets may dent sales of its leather bags, scarves and clothing.
Capital One Financial Corp. rose $1.0625 to $44.4375 on news the financial services company expects third-quarter and full-year earnings to exceed analysts' expectations.
Pub Date: 9/25/97