NEW YORK -- U.S. stocks fell yesterday as rising interest rates hurt financial shares, overshadowing a surge in tobacco stocks. But the Nasdaq composite index closed at a record, led by Microsoft Corp. and Intel Corp.
The Dow Jones industrial average fell 15.88 to 5,762.12, slipping from Wednesday's all-time high. Only six of the 30 stocks in the benchmark average gained. Philip Morris Co. soared $6.25 to $103.875 after an appeals court dismissed the largest class-action case against cigarette makers.
A midafternoon series of computer-generated "sell" orders helped send stocks lower. The Standard & Poor's 500 index fell 2.42 to 676.00, coming off yesterday's record.
"I'm not surprised to see the market back up a little bit," said Jim Thomas, director of equity trading at Davenport & Co. in Richmond, Virginia. "At these lofty levels, the market could take a breather."
The Nasdaq composite managed to beat its Monday high by 0.53 point, rising 1.27 to 1,248.65.
The Russell 2,000 index, which tracks small and mid-sized companies, fell 0.22 to 364.39; the S&P; midcap index fell 0.36 to 241.93; the Wilshire 5,000 index, tracking stocks listed on the New York, American and Nasdaq exchanges, fell 19.31 to 6,737.82 and the American Stock Exchange market value index fell 2.31 to 612.68.
Helping the Nasdaq, Microsoft rose $1.625 to $118.50 and Intel gained $1 to $70.875. Both companies are expected to introduce new products this summer whose sales are expected to boost corporate profits. A Prudential Securities analyst labeled Intel as the "single best idea" among stocks.
The Dow industrials were led lower by Eastman Kodak Co., down $1.875 to $75; and Caterpillar Inc., down $1.625 to $67.625.
General Motors Corp. fell 25 cents to $56.125 amid speculation that the automaker won't shut a Flint, Mich., factory because of high demand for its pickup trucks.
Stocks suffered from a slump in bonds after the departure of Jeffrey Vinik as manager of Fidelity Investments' Magellan Fund. Bond investors are concerned that Fidelity will soon sell some of the billions of dollars of Treasury securities that hurt Magellan's returns this year.
Vinik, who said he was leaving the nation's largest mutual fund to start his own company, was criticized for putting as much as 20 percent of Magellan's $55 billion in assets in bonds just as the bond market tumbled.
Stocks also fell amid concern that higher bond yields will make it more expensive for companies to finance their businesses.
Yesterday's decline in stocks would have been worse but for the gains of tobacco companies. RJR Nabisco Holdings Corp. rose $2 to $33.125; Loews Corp. soared $3.50 to $82.125; American Brands Inc. gained 62.5 cents to $44.50; and UST Inc. jumped $1.75 to $34.375 after the Fifth U.S. Circuit Court of Appeals in Louisiana dismissed a complaint filed on behalf of Dianne Castano and some 50 million other smokers and their survivors.
Financial stocks led the decline in the broad market as the yield on the benchmark 30-year Treasury bond rose 5 basis points to 6.86 percent.
Chase Manhattan Bank fell 87.5 cents to $71.875; BankAmerica Corp. fell 50 cents to $76.125; and Bankers Trust New York Corp. slipped $2 to $75.375.
The 30-year bond yield is still below this year's high of 7.12 percent May 3.
"Now that we've got stabilization in the bond market and perceive a little slower growth in the economy, it will be constructive for the [stock] market," said Eugene Peroni, director of technical research at Janney Montgomery Scott in Philadelphia. "We see improving food, pharmaceutical and consumer non-durable stocks, and also a move back into blue chips."
Some drug stocks rose yesterday. Pfizer Inc. gained $1.125 to $68.625; Eli Lilly & Co. rose $1.375 to $61.125; and Merck & Co. rose 25 cents to $63.375.
Pub Date: 5/24/96