Late Sell-Off Pushes Dow Below 8,000 Level

Stocks dropped sharply in the final hour of trading Tuesday as a report pointing to a pickup in consumer spending this month stirred up inflation fears and sent interest rates rising once more in the bond market.

The Dow Jones industrial average, at one point up 33 points, fell 101.27 to 7,960.84, its first close below 8,000 since July 21. Broad-market indexes also were lower.

The Dow now has tumbled almost 300 points, or 3.6 percent, since hitting a record 8,259.31 last Wednesday.

The change in fortunes has come as yields on 30-year Treasury bonds - a benchmark for consumer and business borrowing costs - have climbed from a 17-month low of 6.29 percent on July 31.

Long-term yields rose to 6.67 percent Tuesday from 6.63 percent late Monday.

Ricky Harrington, a technical analyst at Interstate Johnson Lane in Charlotte, N.C., said that the stock market had been looking for an excuse to sell off of the lofty levels it had reached earlier.

Declining issues outnumbered advancers by a 4-to-3 margin on the New York Stock Exchange, where volume totaled 498.9 million shares as of 4 p.m., up from Monday’s 480.3 million.

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

NYSE

AT&T fell 1-1/8 at 40-5/8.

AT&T led the Big Board action in volume, with 8.6 million shares changing hands, after attempting Monday to bail out of a long-term slump.

Pfizer fell 1-11/16 to 53-3/16.

Merck fell 1-5/8 to 93-5/8.

Johnson & Johnson fell 3/4 to 57-9/16.

Drug stocks fell for the second day running after Morgan Stanley counseled portfolio managers to lighten up on them.

Coca Cola fell 7/8 to 60-7/8.

The soft-drink leader said Friday that its third-quarter earnings would only slightly exceed year-ago levels. Morgan Stanley and Salomon Brothers downgraded Coke stock on Monday, although Goldman Sachs upgraded it.

NASDAQ

Amgen fell 6-15/16 to 50-3/16.

The Thousand Oaks., Calif., drug concern said in a filing with the Securities and Exchange Commission that it expects sales of its Neupogen and Epogen drugs to slow during the rest of 1997. Merrill Lynch & Co. and Credit Suisse First Boston Corp. downgraded the stock, and Smith Barney Inc. kept its rating but cut its earnings estimate.

Apple Computer fell 2-1/2 to 22-1/16.

The computer maker told the Securities and Exchange Commission it does not expect to be profitable in the fiscal fourth quarter. Apple said it expects that net sales would be below prior levels through at least March 1998.