Plunging Tobacco Shares Fuel Market Pullback

Tobacco shares led the way Thursday as the Dow Jones industrial average plunged 160.48 points, or 2.28 percent, closing at 6,878.89.

Tobacco stocks plunged following news reports saying a well-known anti-tobacco lawyer claims to have documents showing RJR Nabisco knew in the 1960s that tobacco was carcinogenic.

Tobacco shares also were hurt by news that Mississippi’s Supreme Court declined to block the state’s attorney general from suing the industry to recover health care costs for smoking-related illnesses.

In NYSE trading, Philip Morris plunged 10-1/4 to 126, accounting for about a fifth of the Dow’s drop, while RJR fell 2-7/8 to 33-1/4, and Loews fell 6 to 104-3/8.

But the Dow’s drop was hardly the work of an isolated few: of the Dow’s 30 components, only AT&T showed a gain for the day. Similarly, broad stock measures also fell sharply, with the Standard & Poor’s 500 list losing about 1.8 percent.

Declining issues outnumbered advancers by nearly a 4-to-1 margin on the New York Stock Exchange, where volume totaled 503.73 million shares as of 4 p.m., up from 483.22 million on Wednesday.

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

NYSE

Wal-Mart Stores, up 1/4 at 29.

Hewlett-Packard, up 1 at 55-5/8.

Johnson & Johnson, down 7/8 at 58-3/4.

Travelers Group, down 1-3/4 at 52-7/8.

Westinghouse Electric, down 1/8 at 18-7/8.

Texaco, down 2-1/8 at 100-5/8.

Bethlehem Steel, down 3/8 at 8-3/8.

Woolworth, down 3/4 at 22-1/4.

The Wall Street Journal is replacing four of the 30 companies in its Dow Jones industrial average, hoping to refresh the venerable measure with more dominant industries of technology, health care and finance. Starting Monday, Travelers, Hewlett-Packard, Johnson & Johnson and Wal-Mart will replace Westinghouse, Texaco, Bethlehem Steel and Woolworth.

Stride Rite, up 3/4 at 13-1/2.

Morgan Stanley analyst Josephine Esquivel raised her rating on the shoe retailer to “strong buy” from “neutral,” the Dow Jones News Service reported, citing a contact at the investment firm.

NASDAQ

Diedrich Coffee, down 1-3/4 at 4.

The coffeehouse operator expects to report a loss of up to $1 million for the fiscal year ended Jan. 29. Diedrich, based in Irvine, Calif., cited weak sales in non-core markets, disappointing holiday sales and a new accounting system that led to breakdowns in transfer of information to management.