NEW YORK -- U.S. stocks fell yesterday as a drop in the dollar raised concern that foreigners will stop spending their money on U.S. company shares. Expectations grew that third-quarter profits will disappoint investors.
Already this month, companies ranging from Apple Computer Inc. to Caterpillar Inc. to Uniroyal Chemical Corp. have said that earnings won't match estimates. Investors have bet all year that the economy would slow enough to support lower interest rates; they are now seeing the downside of that development.
The Dow Jones industrial average fell 25.29, to 4,767.4, after falling as much as 49.49 points at about 1:45 p.m. EDT. It was the second time this week that the 30-stock average had fallen almost 50 points on concern about earnings results.
Shares of J. P. Morgan & Co., DuPont Co. and Minnesota Mining & Manufacturing Co. were the biggest losers. A week ago, the Dow industrials set a record 4,801.8.
Shares of AT&T; Corp. fell $1.125, to $62.625. The company's stock rallied $6.125 on Wednesday after it announced a plan to split itself into three publicly traded companies and fire 8,500 workers as a way to raise its share price and focus on its global telecommunications business.
The broader Standard & Poor's 500 index dropped 3.77, to 583. Shares of telephone, semiconductor, software and banking companies fell the most, while drug, household products and food issues rose.
The Nasdaq composite index, filled with technology stocks, fell 6.58, to 1,058.51, erasing all of Wednesday's 4.78-point gain. The index set a record high of 1,067.4 on Sept. 13.
Shares of Intel Corp. fell $1.54687, to $61.14; Cisco Systems Inc. shed $1.50, to $70.625; and Applied Materials Inc. weakened $2.625, to $102.
Shares of Microsoft Corp. slid $2.50, to $90.625, after the company said sales of its Windows 95 operating system are "on target" with expectations, though they have slowed from the frenzied pace of a month ago, when the product was introduced.
Seven stocks fell for every four that rose on the New York Stock Exchange, where more than 367 million shares changed hands. The Big Board's three-month daily average is 341 million shares.
Among broad market indexes, the Russell 2000 index of small capitalization stocks fell 1.21, to 313.6; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 28.12, to 5,815.15; the AMEX market value index gained 0.44, to 551.44; and the S&P; 400 midcap index dropped 1.41, to 217.04.
Yesterday's most active stocks in U.S. composite trading were those of AT&T;, Intel, MCI Communications Corp., Micron Technology Inc. and PNC Bank Corp.
The dollar plunged 5.3 percent against the Japanese yen, falling below 98 cents for the first time in 13 days, and tumbled against other major currencies as traders tested the central banks' resolve to shore up the U.S. currency.
Concerns about third-quarter earnings helped steady-earning companies such as drug, beverage and household products makers. Early yesterday, Merrill Lynch & Co. raised its medium-term investment opinion on Eli Lilly & Co.'s stock to "above average," partly because earnings growth is expected to accelerate.
Shares of Eli Lilly rose $1, to $90, after being up as much as $5.375; Johnson & Johnson surged $2.125, to $73.75; and Abbott Laboratories rose 37.5 cents, to $42.50.
A Lilly rival, Pfizer Inc., gained $1.875, to $50.75, after one of its executives said sales will rise about 20 percent this year to $10 billion.
A report from the Federal Reserve Bank of Philadelphia lowered expectations for a rate cut and hurt some financial stocks. The bank's general economic index rose to 26.4 in September from 4.4 in August, the third straight month the index has risen.
The report spurred concern that inflation may accelerate.