Stocks retreat as leaders stumble Dow falls 25.79

troubles at Boeing, AlliedSignal prompt selling pressure

October 23, 1997|By BLOOMBERG NEWS

NEW YORK -- Stocks fell yesterday after Boeing Co. warned that it lost money in the third quarter and AlliedSignal Inc. said its earnings missed estimates, triggering concern that share prices are too high.

The Dow Jones industrial average fell 25.79 to 8,034.65, after rallying 2.7 percent in the previous two sessions. The 30-stock Dow average, up 25 percent this year, is on track for its third-straight year of gains exceeding 20 percent. The advances have been fueled by better-than-forecast profits.

Boeing, one of the Dow's companies, fell $4.125 to $49.875 after the world's largest maker of airplanes said it expects to report a loss in the third quarter because of production problems. It also said it will halt manufacturing on 747 and 737 jets for one month, partly because of raw material shortages.

AlliedSignal, also in the Dow, tumbled $3.25 to $40.25, after it reported disappointing third-quarter earnings. Investors are concerned about declining profit at the company's auto parts division.

The Standard & Poor's 500 index fell 3.75 to 968.53, and the Nasdaq composite index fell 4.46 to 1,708.08.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks slid .68 to 457.25; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, lost 17.71 to 9,386.91; the American Stock Exchange composite index gained 1.38 to 713.74; and the S&P 400 midcap index lost 1.19 to 338.03.

Some 1,655 stocks fell and 1,227 rose on the New York Stock Exchange, where about 614 million shares traded, above the three- month daily average volume of 530 million.

Stocks climbed from their lows as drug shares gained. Pfizer Inc. rose $1.3125 to $72.3125 after the company said its Viagra treatment for erectile dysfunction will receive priority review from the U.S. Food and Drug Administration, once the agency formally accepts the application.

Bristol-Myers Squibb Co., which reported profits that topped expectations, jumped $3.8125 to $90.1875; Warner-Lambert Co. rose $1.875 to 149; and Eli Lilly & Co. rose $1.125 to $67.6875.

Boeing is the Dow's second-worst performing stock, behind Eastman Kodak Co. this year, with a 6.3 percent loss.

One Boeing supplier, Parker Hannifin Corp., was unchanged at $51. BFGoodrich Co., climbed 31.25 cents to $45.8125.

One of the most-active stocks -- and biggest losers -- in U.S. trading was China Telecom (Hong Kong) Ltd. The company's American depositary receipts dropped $2.50 to $28 in their first day of trading as the Hong Kong stock market tumbled more than 6 percent on concern over rising interest rates.

Shares of CoreStates Financial Corp. dropped $2.9375 to $77.625 after the bank repeated its rejection of Mellon Bank Corp.'s takeover offer. CoreStates had rallied 11.3 percent since Oct. 9.

Vencor Inc., an operator of hospitals and other health-care facilities, tumbled $12.125 to $30.50 in trading of 7 million shares. The company's third-quarter profit was disappointing, and it forecast a drop in fourth-quarter earnings.

United Technologies Corp. rose 68.75 cents to $79.8125 after the maker of jet engines, elevators and air conditioners said it earned $1.16 a share in the third quarter, above $1.12 predictions.

Minnesota Mining & Manufacturing Co. jumped $5.75 to $100.375 after the company said third-quarter profit rose, in line with estimates, on strong sales and productivity gains.

Bell Atlantic Corp. rose $1.75 to $84.125 after the company's third-quarter profit from operations of $1.25 a share topped estimates by a penny.

Boeing, HBO & Co., Noise Cancellation Technology Inc., Intel Corp. and China Telecom were the most-active stocks in U.S. trading.

Boston Scientific Corp. fell $6.4375 to $51. The medical-device maker told analysts to expect lower 1998 earnings because of tougher business conditions overseas.

Pub Date: 10/23/97

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