Rising Interest Rates Halt Stock Market Rally

Tobacco stocks slid Wednesday, and blue-chip issues faltered again as they approached record levels, with investors using higher interest rates in the bond market as an excuse to secure profits in another lifeless summer session.

The Dow Jones industrial average fell 31.44 to 5,689.82, recovering over the last two hours from a 48-point slide. More than a third of the drop came from Philip Morris, which was dragged lower by the latest storm clouds facing the tobacco industry.

But even without Philip Morris, the Dow’s retreat marked the third time since July’s steep sell-off that the famed blue-chip barometer has stumbled after rebounding above 5,700 and back within striking distance of its all-time high at 5,778.00, set May 22.

Broader market measures trimmed their losses toward the close, and a late rally in technology shares pulled the Nasdaq market into positive territory.

Declining issues outnumbered advancers by a 7-to-6 margin on the New York Stock Exchange, where volume totaled 351.24 million shares as of 4 p.m., the first tally above 350 million in two weeks.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

PepsiCo, up 1/2 at 30-5/8.

The stock rebounded slightly from worries about Pepsi’s South American operations. Tuesday, the front page of the New York Times business section featured an article on Pepsi’s problems in Venezuela, where the company’s leading bottler switched over to Coca-Cola last week.

Philip Morris, down 3-7/8 at 87-5/8.

RJR Nabisco, down 1-3/8 at 25-1/4.

B.A.T Industries (Amex), down 5/8 at 13-3/4.

The Clinton administration announced that a decision on whether to allow the FDA to regulate tobacco as a drug could come by Friday.

Jenny Craig, down 5-5/8 at 11-1/2.

The diet-center operator reported a drop in participation in its programs, blaming new weight-loss drugs.

NASDAQ

Oracle, down 1-1/8 at 37-7/8.

Goldman Sachs removed the database maker from its U.S. priority list, citing a sharp increase in stock price and some weakness in European operations, the Dow Jones News Service reported. Oracle remains on Goldman’s recommended list.

CompuServe, down 1-5/8 at 11-7/8.

H&R Block (NYSE), down 3/4 at 27-5/8.

CompuServe posted a fiscal first-quarter loss and warned investors it also expects a loss in the second quarter. CompuServe, based in Columbus, Ohio, said late Tuesday its on-line subscriber base slipped from the fourth quarter to the first quarter. Kansas City-based H&R Block, which still owns 80 percent of CompuServe, cited CompuServe’s performance in reporting its own loss for the period.