Stocks tumble amid slump by bonds


NEW YORK -- U.S. stocks retreated, pushed down by falling prices for paper, technology and auto shares and a slumping bond market.

The Dow Jones industrial average tumbled 21.79, to 4,680.60. International Paper Co., General Motors Corp. and Union Carbide Corp. posted the biggest losses.

Technology stocks suffered after Advanced Micro Devices Inc. posted unexpectedly weak second-quarter earnings of 86 cents a share, down from 93 cents a year ago and analyst forecasts of 95 cents.

More than 13 stocks fell for every 10 that rose on the New York Stock Exchange, where volume fell to 376.7 million shares from 409.65 million yesterday.

The Standard & Poor's 500 index dropped 2.41, to 554.78. The technology-laden Nasdaq composite index declined 6.41, to 970.22. The Russell 2000 index of small-company stocks reversed an early loss of as much as 0.52 and added 0.38 to 291.05, a new record.

The American Stock Exchange market value index rose 2.88, to 509.05, also a record. The Wilshire 5000 index slipped 19.25, to 5461.1.

Paper stocks slumped after surging 32 percent since Jan. 30. International Paper fell slid $4.125, to $86.625. The Purchase, N.Y.-based company reported stronger-than-expected second-quarter earnings of $2.49 a share, up from 73 cents last year, declared a 2-for-1 split and raised its dividend 19 percent.

Much of yesterday's news had already been reflected in recent gains in International Paper shares, traders said. In addition, the Wall Street Journal said a host of institutional investors are selling their holdings in the paper industry and Morgan Stanley & Co. downgraded investment opinions on four paper stocks because of their rapid rise.

Weyerhaeuser Co. fell $1.625, to $48.375, Kimberly-Clark Corp. dropped $1.125, to $58.75, Willamette Industries weakened $1.625, to $62.75 and Georgia-Pacific Corp. declined $2.125, to $92.87.

AMD shares dropped $2.25, to $34 in trading late Monday after reporting its earnings, and fell as low as $33 yesterday before closing at $34.375.

Technology stocks have been the market's bulwarks. The Standard & Poor's Semiconductor Index is ahead 71.1 percent since the first of the year, while the S&P; index of computer software companies is ahead 42.2 percent.

Motorola Inc. slumped $1.75, to $68.375. One of Motorola's suppliers, M-Wave Inc., said yesterday it didn't get the number of orders from Motorola it had expected in the second quarter. M-Wave shares slumped $3.125, to $15.25.

After the market closed, Motorola, a maker of semiconductors as well as cellular telephones, said it earned 79 cents a share in the second quarter, six cents above analysts' forecasts and up from 63 cents last year.

Motorola shares spurted $2.125, to $70.50 in third-market trading after earnings were released.

Tomorrow, the semiconductor industry's June new-orders report will be released.

Recent splits among tech stocks have included Intel Corp., Texas Instruments Inc., Micron Technology Inc., Informix Corp., Oracle Corp. and America Online Inc.

Bank, brokerage, insurance and other financial stocks dropped amid losses in the bond market, which pushed up yields on the 30-year Treasury bond to 6.58 percent from 6.52 percent yesterday.

Salomon Inc., parent of Salomon Brothers Inc., tumbled $3.625, to $37.25. The securities firm said it expects to report a second-quarter loss of about $65 million because of trading losses.

Auto stocks fell after Chrysler Corp. said yesterday it will take a $143 million charge against second-quarter earnings in connection with production changes at its Newark, Del., plant. Chrysler fell $1.125, to $48.87, General Motors Corp. eased $1.25, to $50.50 and Ford Motor Co. dropped 62.5 cents, to $32.25.

United Technologies helped trim the Dow's loss, rising 87.5 cents, to $81.375. Prudential Securities raised its price target on the maker of Otis elevators and Pratt & Whitney jet engines to $100 a share from $84.

Even with yesterday's decline, many traders remain optimistic on the outlook for U.S. stocks. Investors, they said, are confident corporate earnings will accelerate later this year and in 1996.

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