NEW YORK -- U.S. stocks fell yesterday amid concern that rising borrowing costs will squelch consumer spending and corporate profits in the coming year.
Rate-sensitive stocks such as Wells Fargo & Co. and Golden West Financial Corp. led the retreat, amid a flurry of buyout announcements. Telecom stocks slumped on the prospect of competition from WorldCom Inc., which said it would buy MFS Communications Co. for about $14.4 billion in stock.
The 30-stock Dow industrial average fell 28.85 to 5,693.89, led lower by shares of J. P. Morgan & Co. The broader Standard & Poor's 500 index dropped 3.15 to 663.88 and the computer-industry heavy Nasdaq composite index slid 3.83 to 1,139.22.
Yesterday was among this year's slowest trading sessions, with combined volume on the New York Stock Exchange and the Nasdaq composite index at about 613 million shares. The year-to-date average is about 921 million.
Among smaller shares, the Russell 2,000 index of small capitalization stocks fell 0.25 to 331.52; the Wilshire 5,000 index dropped 23.69 to 6505.48; the American Stock Exchange market value index fell .32 to 560.62; and the S&P; midcap index slid .85 to 231.99.
Decliners outnumbered advancers on the NYSE by 1,348 to 868.
On news of WorldCom's announcement, AT&T; Corp. fell $1 to $53.625; BellSouth Corp. slumped 62.5 cents to $38; and Nynex Corp. dropped 62.5 cents to $44.25.
MCI Corp. bucked the trend, rising $1.25 to $26.75 after it said that it reached a 10-year deal with NextWave to offer wireless personal communications services in 63 areas, including 29 of the top 50 markets.
Banks slid. Citicorp declined $1.25 to $85.625; Golden West Financial fell $1 to $56.50; and First Chicago NBD Corp. lost 50 cents to $43.875. Dow member J. P. Morgan & Co. retreated $1.50 to $89.875.
Frank Barkocy, a banking analyst at Josephthal, Lyon & Ross Inc., said financial shares could suffer a drop of 5 percent soon because of the increasing likelihood that interest rates will rise in the next couple of months.
The yield on the benchmark 30-year Treasury bond rose to 7.00 percent for the first time since July 30, up from 6.95 percent Friday.
Automakers, whose sales depend on favorable loan rates, were mixed. General Motors Corp. declined 50 cents to $50.625 and Chrysler Corp. sank 37.5 cents to $29.125. Ford climbed 12.5 cents to $33.875.
Philip Morris, maker of top-selling Marlboro cigarettes, rose $2.375 to $90.375 as investors grew more confident that tobacco companies can withstand the barrage of smoking-related suits filed by states and individuals in the past year. A jury in Indiana said late Friday that Philip Morris and other tobacco defendants weren't negligent in the death of a former smoker.
RJR Nabisco Holdings Corp. rose $1.125 to $26.625 yesterday, and Loews rose $1.25 to $76.
A decline in the price of crude drove down oil stocks. Exxon Corp. dropped 87.5 cents to $81.625; Chevron Corp. lost 62.5 cents to $59.25; and Mobil Corp. slid 50 cents to $113.625.
Pub Date: 8/27/96