NEW YORK -- U.S. stocks retreated yesterday for the second time this week as rising Treasury bond yields threatened to make financial and telephone shares less attractive, and Procter & Gamble Co. slumped.
The Dow Jones industrial average fell to 5,713.49, down 5.18. P&G; alone knocked almost 9 points off the Dow, one day after the 30-stock average rose within 1 percent of its May 22 peak. Since sliding in mid-July, the Dow has rebounded more than 500 points, or 10 percent.
In the broader market, the Standard & Poor's 500 index fell to 662.59, a 1.57-point loss; the Nasdaq composite index dropped 3.60 to 1,137.51; the Russell 2,000 index fell 0.2 to 327.35; and the Wilshire 5,000 index sank 10.11 to 6,480.11. The American Stock Exchange market value index rose 1.53 to 551.77.
Weak demand at the Treasury's auction of $10 billion of 30-year securities drove up yields to 6.79 percent from 6.77 percent Wednesday.
Advancing issues outnumbered declining stocks on the New York Stock Exchange, 1,141 to 1,138.
Procter & Gamble led the slump in the Dow industrials, falling 2.875 to 87.875. Profit in the latest quarter, excluding gains and charges, only matched analysts' forecasts of 75 cents a share, up from 65 cents a year ago.
Hurt by P&G;, consumer growth stocks lagged so-called "cyclical" stocks, whose business is more closely tied to whether the economy grows or slows, for a second day. Morgan Stanley's consumer index dropped 1.94 to 307.33 and its index of cyclical stocks rose 1.38 to 364.64.
Computer-related stocks, which led Wednesday's advance, ran into a wall yesterday.
Semiconductors gave back part of Wednesday's gains after KLA Instruments Corp. said fiscal fourth-quarter earnings fell to 47 cents a share from 61 cents a year ago, and 17 cents beneath analysts' forecasts. KLA slid $2.375 to $20.50.
Semiconductor shares also suffered from the fact that Smith Barney Inc. began research coverage of three key stocks -- KLA, Applied Materials Inc. and Novellus Systems Inc. -- with "neutral" investment ratings.
Applied Materials, a maker of semiconductor manufacturing equipment, fell $1.3125 to $26.125 while Novellus dropped 25 cents to $41.
Telephone stocks retreated as interest rates rose. BellSouth Corp. fell $1 to $39.75; Ameritech Corp. dropped $1.50 to $55.875; and Bell Atlantic Corp. skidded $1.25 to $59.75.
A host of financial stocks also reacted to higher rates. Chase Manhattan Corp. fell 25 cents to $72.375; First Chicago NBD Corp. dipped 37.5 cents to $40.125; and Wachovia Corp. fell 50 cents to $45.25.
Similarly, electric utilities fell. Houston Industries Inc. dropped 37.5 cents to $23.375 and Duke Power Co. fell 25 cents to $48.625.
Better-than-expected earnings from Nokia Oy, a Finnish cellular telephone maker, and Sara Lee Corp. helped temper stocks' decline.
Nokia's American depositary receipts rallied $3.375 to $39.875 after the Finnish company's earnings fell less than expected and the maker of cellular phones left open the possibility of a better second half.
Nokia's rally helped lift shares of its rivals, Motorola Inc., ahead 50 cents to $57.75 and Sweden's LM Ericsson, whose ADRs gained 56.25 cents to $21.4375. The three are the world's leading makers of cellular telephones.
Cheesecake maker Sara Lee reported fiscal fourth-quarter earnings rose to 52 cents a share from 45 cents a year earlier, beating analysts' estimates by 2 cents. Sara Lee was unchanged at $32.125.
Equitable Cos. rose 12.5 cents to $24.75. Second-quarter operating earnings at the financial services company rose to 63 cents a share from 45 cents last year and estimates of 57 cents.
Pub Date: 8/09/96