Stocks fall on prospect of flatter earnings Merck, other drug firms' shares slip; Dow index drops 45 points to 6,563


NEW YORK -- U.S. stocks fell yesterday, led by Merck & Co., amid concern that profit growth may not meet expectations as competition intensifies.

The Dow Jones industrial average fell 45.32 to 6,563.84, paced by Merck, on concern that Merck's best-selling cholesterol drugs may be losing market share to a new medication from Warner-Lambert Co.

The Standard & Poor's 500 index fell 5.52 to 760.60 and the Nasdaq composite index fell 7.94 to 1,249.43.

The Russell 2,000 index of small capitalization stocks gained 0.76 to 346.73; the Wilshire 5,000 index of stocks on the New York, American and Nasdaq exchanges lost 37.15 to 7,268.60; the American Stock Exchange composite index climbed 1.56 to 562.98; and the S&P; midcap index slid 0.55 to 255.29.

Advancing stocks and decliners were about equal on the New York Stock Exchange.

Merck fell $3.75 to $81.50. Warner-Lambert rose $1.375 to $94.875. Among other drug shares, Eli Lilly & Co. fell $2.375 to $79.875; Pfizer Inc. declined $2 to $84; and Schering-Plough Corp. fell $1.375 to $72.75.

Procter & Gamble Co., the Dow's biggest gainer, rose $4 to $119.75 after the Cincinnati-based consumer products conglomerate agreed to buy Tambrands Inc. Tambrands, which rose $2 to $48.125, has had a negative return of 16.51 percent the past five years.

General Electric Co. gained 62.5 cents to $101.875 after Dow Chemical Co. said it had resolved a dispute related to accusations that GE raided Dow's automotive-plastics division for personnel and used trade secrets. Dow lost 12.5 cents to $79.875.

Long-term bond yields were unchanged yesterday at 7.10 percent.

NationsBank Corp. lost $1.375 to $57.25; Wells Fargo & Co. dropped $8.25 to $276; and First Union Corp. fell $1.625 to $82.625.

Seagate Technology Inc., a computer disk drive maker, reported net income of $1.01 a share, 7 cents more than analysts surveyed by IBES International Inc. expected. Seagate rose $2 to $54 in early trading before closing down $2.50 to $49.50.

Other disk drive makers pared gains as well, including Western Digital Corp., which climbed to $70.50 before falling back to $68.375, up 62.5 cents.

Cephalon Inc. gained $1.625 to $20.875 after the drug company said it would buy options covering up to 10 percent of its stock. Analysts say the company is betting that regulators will approve the company's drug to treat Lou Gehrig's disease. If the bet pays off, the company will earn $45 million to help buy out investors in a limited partnership that helped fund development of the drug, said Montgomery Securities analyst Scott Secane.

HBO & Co. rose $1.75 to $51.375 after it reported earnings per share 4 cents higher than analysts expected.

Dynamics Corp. of America gained $3.75 to $43.875 after WHX Corp. said it sweetened its hostile bid for the appliance maker to $45 a share, from its earlier offer of $40 a share.

Biogen Inc. declined $1.25 to $38 after the Boston biotechnology company said the European Patent Office revoked the patent on its multiple sclerosis drug, clearing the way for competitors to develop similar products.

Pub Date: 4/10/97

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