Dow hits two-month low of 4,584.85


NEW YORK -- U.S. stocks fell yesterday as Goodyear Tire & Rubber Co., Caterpillar Inc. and Walt Disney Co. tumbled, pulling the Dow industrial average down to its lowest level in almost two months.

And optimism was fading that Microsoft's introduction today of its Windows 95 software would boost sales of a host of related products, to be replaced by concern that sales won't meet expectations.

"Some people are a little bit nervous about whether Windows 95 will live up to some of the expectations set for it, which are very high," said Peter Rubicam, software analyst at Dean Witter Reynolds Inc.

The Dow Jones industrial average dropped 35.57, to 4,584.85, its lowest level since June 30. The average last set an all-time high July 17. Two rounds of computer-guided selling compounded the decline, according to Birinyi Associates Inc.

Goodyear shares led the 30-stock average lower, falling $1.50, to $39.50, after the U.S. Justice Department announced it is investigating whether the nation's tire companies are engaging in anti-competitive practices. Also, Merrill Lynch & Co. analyst Harvey Heinbach lowered the shares to "neutral" from "above average" because of concern that the tire company's earnings will lag behind estimates.

Caterpillar's stock fell for a second day after Salomon Brothers downgraded its shares, also citing slower profit growth. The shares lost $1.375, to $65.375. And Disney's shares tumbled $1.375, to $57.375. The entertainment company said today it will start an on-line service called Disney Online.

The broader Standard & Poor's 500 index fell 2.38, to 557.14, its lowest since July 24. Telephone, retail and paper issues slipped, while computer chip, auto and drug shares advanced.

The Nasdaq composite index, chock-full of technology issues, bucked the trend, rising 2.9 to 1,028.19, as Sun Microsystems Inc., Applied Materials Inc. and Roadway Services Inc. soared.

The Russell 2000 index of small companies gained 0.19 to reach 304.51, approaching its latest record high of 305.48 Monday.

The Wilshire 5000, meanwhile, sank 13.24 to 5,561.42, and the American Stock Exchange market value index gained 0.42 to 528.81.

Some 1,292 shares declined and 909 advanced on the New York Stock Exchange. About 291.39 million shares changed hands, little changed from Tuesday and below the 340.56 million daily average volume over the past six months.

Microsoft Corp.'s shares dropped $1.4375 to $97.875, pulling down shares of other software companies, after jumping 5 percent Tuesday. Anticipation of Windows 95, the successor to its best-selling operating system, Windows, helped to spark a 62.5 percent rise in Microsoft's shares this year.

The impending introduction of Windows 95 also has buoyed technology issues, because analysts and investors expect the new software to spark sales of computer-related products that work with it.

Some analysts said, though, that consumers and companies will be slow to buy new computers and software programs to use Windows 95.

Novell Inc. shares slipped 6.25 cents, to $19.50. The computer company reported earnings after the market closed that fell 1 cent short of analysts' expectations, according to Zacks Investment Research.

Still, shares of computer chip companies gained for a second day after a Salomon Brothers analyst said that she thinks that Intel Corp., one of the market's leaders, will continue to outperform the market. Intel eked out a 12.5-cent advance to reach $62.375 after gaining $2 Tuesday.

Applied Materials, which last week reported surprisingly good earnings, jumped $1.875 yesterday to reach $112.75. Micron Technology Inc.'s shares were up $1.625, to $74 and Texas Instruments Inc. rose $1, to $77.50.

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