NEW YORK -- U.S. stocks fell yesterday as investors questioned whether restaurant and health-care companies' profits would live up to expectations. McDonald's Corp. and Columbia/HCA Healthcare Corp. led the decline.
The Dow Jones industrial average slid 21.68, to 5,579.55, after seven days of records that gave it a 4.2 percent gain. McDonald's and Procter & Gamble Co. accounted for more than half the drop.
Computer-guided program trades contributed almost 17 points to the decline, according to Birinyi Associates Inc.
Trading is expected to be volatile through tomorrow's "double-witching," when options on U.S. stock indexes and stocks expire.
Among the Dow stocks that fell, McDonald's dropped for a second day, sliding $2.125 to $50.50. On Tuesday, it was lowered to "attractive" from "buy" at Bear Stearns Cos.
Procter & Gamble slipped $1.875 to $85.75, and Texaco Inc. fell $1.625 to $81.
Some 1,173 stocks rose and 1,156 fell on the New York Stock Exchange, where 421.8 million shares changed hands, below Tuesday's 440.75 million.
The Standard & Poor's 500 index dropped 4.93 to 655.58, as regional telephone, savings-and-loan and health-care issues fell. The index has gained 6.44 percent so far this year.
Shares of health-care providers dropped after Columbia/HCA Healthcare, the nation's largest publicly traded hospital chain, announced its fourth-quarter profit rose 24 percent, slightly below estimates. Shares fell $1.25 to $56.75.
Humana Inc. earnings contributed to the decline. The Louisville, Ky., health-care provider fell $1.50 to $27.25 after it reported that its earnings rose 2.1 percent; enrollment gains were held back by higher medical costs per member.
While Humana's profits matched expectations, Merrill Lynch & Co. lowered its 1996 earnings estimates for the company, "primarily to reflect the expected slow earnings growth in the first half of the year," it said in a report to customers.
Among HMOs that fell, Foundation Health Corp. skidded $1.625 to $40; Oxford Health Plans Inc. dropped $1.25 to $81; and U S Healthcare Inc. lost 37.5 cents to $47.375.
Among other indexes, the Russell 2,000 index of small companies climbed 1.25 to 321.07, approaching its high on Monday; the American Stock Exchange market value index added 0.36 to reach a high of 560.98; and the Wilshire 5,000 index dropped 26.98 to a 6,385.30.
Applied Materials Inc. closed up 62.5 cents at $39, after gaining $2.75 earlier in the day. The stock dropped $1.625 Tuesday. The Santa Clara, Calif.-based company announced that its fiscal first-quarter earnings more than doubled as sales of semiconductor production equipment soared.
Lam Research Corp., which also makes equipment used to manufacture chips, climbed $1.0625 to $39.5625.
The yield on the 30-year government bond rose 7 basis points to 6.09 percent as investors waited for economic reports that could sway the Federal Reserve's decision on whether to lower interest rates again.