Dow Dips 27 Points As Investors Take Breather

Scattered weakness among blue-chip issues weighed down the Dow industrials, but broader stock measures rose Thursday and smaller-company shares pushed further into record territory.

The Dow Jones industrial average fell 27.40 to 7,867.24 after recovering over the final hour from a 76-point deficit.

All other popular stock measures posted modest gains, however, with the Russell 2000 index of smaller companies cruising to its sixth consecutive record high and its ninth straight winning session.

The continued focus on smaller and midsized companies also bolstered the technology-heavy Nasdaq market, which rose despite the second discouraging forecast in two days from a leading computer industry concern.

“There’s a lot less than meets the eye today. The market looks a whole lot better than the Dow,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter.

Advancing issues outnumbered decliners by a nearly 8-to-7 margin on the NYSE, where volume was heavy again at 559.33 million shares as of 4 p.m., up slightly from Thursday’s 548.72 million.

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

NYSE

Advanced Micro Devices, down 3-5/8 at 35-1/4.

Intel (Nasdaq), up 13/16 at 94-5/8.

The chipmaker warned that it expects to report a small operating loss for the current quarter because it hasn’t been able to produce as many of its new K6 microprocessors as planned.

Hudson Foods, up 3-15/16 at 21-1/8.

Tyson Foods (Nasdaq), up 2-1/8 at 23-1/2.

Poultry giant Tyson agreed to pay $642 million in cash and stock to acquire Hudson Foods, which last month recalled 25 million pounds of hamburger because of a contamination scare.

AnnTaylor Stores, down 1-15/16 at 14-15/16.

The women’s apparel retailer reported that sales from stores open at least a year fell 22.1 percent last month. Sales from all stores fell 19.2 percent compared with August 1996.

Caterpillar, down 3-7/16 at 56-3/8.

Deere & Co., down 1-9/16 at 55-3/4.

Smith Barney downgraded its investment ratings on the two companies and seven other machinery and construction concerns, the Dow Jones News Service reported.

NASDAQ

American Management Systems, down 5-7/8 at 18-3/4.

The consulting company lowered its earnings forecast for the year. American Management said Swiss Telecom had declined to extend a billing and customer care systems contract.

Roy F. Weston, up 2 at 5.

The pollution control company was awarded a contract valued at up to $242 million from the Environmental Protection Agency.