NEW YORK -- U.S. stocks fell yesterday for the first time in five days, buffeted by a swooning dollar and a bond market slump. Oil and auto companies led the decline as the crisis of confidence in Mexico rippled through U.S. markets.
The peso's devaluation and doubts about the government's ability to repay billions of dollars of debt has raised concern about U.S. companies' exposure in Mexico, said John Shaughnessey, director of research at Advest Inc.
"What U.S. banks could be affected, what's the impact on auto companies and the retailers that just opened up in Mexico" are questions weighing on investors, he said.
Among companies with large operations in Mexico, shares of General Motors Corp. slumped 62.5 cents, to $41.25; construction equipment maker Caterpillar Inc. fell $1, to $54.25; Sears, Roebuck & Co. dropped 62.5 cents, to $45.125; and Bank of Boston Corp. slid 12.5 cents, to $26.125.
The Dow Jones industrial average fell 22.20, to 3,839.49, after being down as much as 35.33 points. The average gained 94.54 points, or 2.5 percent, over the prior four days. The decline was fueled by losses in International Paper Co., International Business Machines Corp., Caterpillar and AlliedSignal Inc.
"We've had rally for the last week, so we're giving up some here," said Barry Berman, head trader at Robert W. Baird & Co. in Milwaukee.
Among broader market indexes, the Standard & Poor's 500 index dropped 1.61, to 460.86, its first loss in five days. The Nasdaq combined composite index fell 3.73, to 742.46, its biggest one-day drop since Dec. 8. Shares of Intel Corp., Tele-Communications Inc. and Cisco Systems Inc. fell the most.
The Standard & Poor's specialty retail index of nine stocks was the worst performer in the S&P; 500, falling 25.22, or 2.6 percent, to 948.1. Shares of Toys 'R' Us Inc. led the decline, tumbling $3, to $30.125, as analysts cut earnings estimates and said European profits may be disappointing.
Investors are "scalping the retailers" after reports Christmas sales didn't match expectations, said Jay Ferguson, market analyst at Ferguson, Andrews & Associates Inc. "Over the last couple of weeks, there's been a ratcheting-down of expectations."
The drop in specialty retail stocks came after Wertheim Schroder & Co. analyst Robert Schweich lowered his estimate of 1995 and 1996 earnings at Toys 'R' Us. Mr. Schweich said he now expects the Paramus, N.J.-based company to earn about $1.85 a share in the year ending Jan. 31, down from an earlier estimate of $1.95, traders said.
Other specialized retailers followed suit. Home Depot Inc. was down 25 cents, to $46.50; Lowe's Cos. lost 50 cents, to $34; Circuit City Stores Inc. dropped $1, to $21.375; and Price/Costco Inc. shed 25 cents, to $12.625.
Declining stocks outpaced advancers by about 13-to-8 on the New York Stock Exchange, where about 243.5 million shares traded hands. That's below the three-month daily average of 302.9 million.
Shares of oil companies fell amid concern about earnings from refining crude oil. U.S. refiners are making little money as gasoline prices drop.