Mixed Economic Signals Cause Stocks To Fall

Stocks fell Friday in tandem with a sharp drop in bond prices, as conflicting signals in a report of a sluggish economy lowered hopes for an interest-rate cut next month.

The Commerce Department said the nation’s gross domestic product grew by an anemic 0.5 percent in the three-month period ending June 30, slowed by inventories and housing investment.

While that was in line with economists’ expectations, it was much softer than the growth reported for the two previous quarters. But there also were signs of a modest recovery in the figures from the government and in a survey of consumer confidence by a university.

The Dow Jones industrial average lost 17.26 points to close at 4,715.51. The Dow dropped as low as 4,705.64, down 27 points, before recouping some of its losses.

Decliners squeaked by advancers on the New York Stock Exchange. Volume was moderately heavy at 310.05 million shares, compared with 355.15 million on Thursday.

Stocks dropped sharply in the first hour of trading, after investors saw the White House’s assessment of economic data released before the market opened.

Investors guessed that the slowing in the economy might prompt the Federal Reserve to further lower interest rates at a policy meeting next month. But Clinton Administration officials dashed those hopes by saying publicly that the data were not a surprise.

Some of the stocks that moved substantially Friday:

NYSE

Archer Daniels Midland rose 1/8 to 16-1/8.

Justice Department officials have possession of videotapes showing ADM officials, who are suspected of price-fixing of livestock-feed additives, met with competitors.

Allstate rose 7/8 to 31-1/4.

The state of California has proposed to take over responsibility for earthquake insurance, which by law must now be offered as part of private homeowners insurance policies. Allstate is one insurance company that writes many homeowners policies in that state.

Bank of Boston rose 2-1/8 to 43-3/4.

Chief Executive Ira Stepanian resigned under pressure from directors, after two merger deals for the bank fell through. He is succeeded by Charles Gifford, the bank’s current president.

NASDAQ

American Power Conversion fell 4 to 18-3/8.

Second-quarter net income was 19 cents per share, up from 17 cents a year ago. But analysts had expected the company, which makes power-surge protectors for computers, to earn 23 cents per share.

Gateway 2000 rose 2-3/8 to 29-5/8.

Micronics rose 1/2 to 4-1/2.

The two companies said they will buy Osborne Computer of Australia by assuming Osborne’s debts. Late Thursday, Gateway said its secondquarter net earnings rose to 44 cents a share from 5 cents in the same period last year.

AMEX

Viacom’s Class “B” shares rose 5/8 to 50-5/8.

Second-quarter profit fell 78 percent, but the company’s cash flow, which is more important in the entertainment industry, increased 36 percent.