Big losses in 3 stocks restrain Dow


NEW YORK -- Blue-chip stocks closed slightly lower yesterday for the third straight day, as slumps in Philip Morris, International Business Machines and Westinghouse Electric offset gains in other stocks in the Dow Jones industrial average.

"Three stocks distorted the facts," said Dennis Jarrett, market analyst at Kidder, Peabody & Co. "You take Philip Morris, IBM and Westinghouse out of the market, and the Dow was up on the day."

The Dow closed down 0.27, to 3,174.41, but finished 37.83 points higher for the week.

Meanwhile, the broader market rose yesterday. The NASDAQ Combined Composite index gained 3.93, to 582.57; the Dow Jones transportation average rallied 22.56, to 1,283.21; and Standard & Poor's 500 index rose 2.13, to 411.73.

Trading was active on the New York Stock Exchange, with about 235 million shares changing hands. Volume was higher than usual because of activity related to October's expiration of stock-index options and options on individual stocks. Advancing common stocks led declining issues by a margin of 4 to 3.

Philip Morris and IBM fell further on earnings concerns, and Westinghouse's stock was hurt by fears about the company's credit quality. Trading in the three stocks accounted for 12 percent of volume on the Big Board.

"These are obviously three major components of the Dow and bellwether stocks for the entire market," Mr. Jarrett said. "With that in mind, it's amazing how well the stock market held up."

Stocks received a boost from a rally in Europe. Britain's FT-SE 100 index gained 17.3 points, or 0.68 percent, and France's CAC 40 index rose 14.16 points, or 0.86 percent, after the Bank of England signaled a one-point cut in base lending rates, to 8 percent.

"The Bank of England's decision puts direct pressure on the Bundesbank to take similar steps," said Thom Brown, a director at Rutherford, Brown & Catherwood. "Lower interest rates in Europe is precisely the right medicine for U.S. stocks."

Traders and analysts said Thursday night's presidential debate had little effect on the market. A CBS News poll said most people thought Gov. Bill Clinton won the debate.

Stocks were restrained somewhat by a drop of more than 1/4 point in the 30-year Treasury bond, to yield 7.53 percent. Treasury bonds fell after a report in the Los Angeles Times suggesting that Mr. Clinton would speed up his spending plan if the economy remains soft. The fear is that higher government spending would increase the federal budget deficit, and perhaps inflation.

Philip Morris fell 2 7/8 , to 76 7/8 , on continued concerns about the company's earnings outlook. The company warned in its earnings report that tobacco shipments are slowing in the United States.

Westinghouse Electric fell 1 3/8 , to 11 7/8 , on concerns about declining credit quality.

IBM fell an additional 2 1/4 , to a new 10-year low of 70 5/8 . The company stunned investors Thursday with a third-quarter loss of nearly $2.8 billion, or $4.87 a share, reflecting charges of $5.02 a share.

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