Stocks Mixed as ‘Rotation’ Among Groups Roils Market

The stock market’s churning pattern of recent weeks continued on Thursday, as some investors dumped recently hot industrial and technology issues in favor of drug and consumer-product stocks.

Overall the market finished mixed in surprisingly light trading, with most key indexes lower but winners edging losers on the New York Stock Exchange and Nasdaq.

The Dow Jones industrial average fell 28.54 points to 5,626.88, its third straight loss.

Traders noted that many investors continue to run from stock group to stock group, buying issues that have been hit by profit-taking while selling shares that have run up for several days or more.

Thursday’s big winners were drug stocks, which had been declining for the past two weeks. Meanwhile, many technology issues pulled back sharply for a second day, in the wake of Digital Equipment’s warning Wednesday that its personal-computer sales have slowed.

Some analysts said that a Federal Reserve Bank report Thursday on Philadelphia-area manufacturing helped accelerate selling in tech and industrial stocks because it showed a sluggish regional economy in February.

Many technology and industrial stocks had been rising in recent weeks on hopes for stronger corporate earnings in a more robust economy. But “during the last couple of trading sessions, the pendulum has swung back,” said John Kim, chief investment officer of $34-billion-asset Aetna Retirement Services. “The manufacturing sector is weak.”

In the bond market yields closed down for a second consecutive session, though modestly so. Bond traders are awaiting the Fed’s meeting on Tuesday, although the central bank isn’t expected to affect any changes in market interest rates.

The 30-year Treasury bond yield dipped to 6.62% Thursday from 6.63% Wednesday.

Among Thursday’s highlights:

* Tech stocks falling further included IBM, off 2 1/8 to 114 7/8; Digital, down 2 3/4 to 53 1/4; Hewlett-Packard, off 2 7/8 to 94 3/4; and Computer Sciences, off 2 to 70 7/8.

Also, computer networker Cabletron Systems sank 5 1/4 to 69 3/4 after reporting quarterly earnings and after saying that its founders, Robert Levin and Craig Benson, plan to sell unregistered shares of the company to “diversify” their investment holdings.

* Industrial stocks losing ground included Deere, off 5/8 to 41 3/8; International Paper, down 1/2 to 38 1/2; Georgia Gulf, down 1 1/4 to 36 7/8; Reliance Steel, off 1 1/8 to 22 5/8; and Emerson Electric, down 1 1/8 to 80 1/2.

But Furon jumped 1 7/8 to 22 3/8.

* On the plus side, sudden buying of drug stocks sent Merck up 2 1/2 to 65 1/2; Pfizer up 3 1/2 to 66 7/8; Eli Lilly up 4 5/8 to 66 5/8; Amgen, up 1 7/8 to 61 3/4; and Schering-Plough, up 1 3/8 to 60 5/8.

Some analysts said the buying wave was fueled partly by news of a study that said the drug Aricept, which Pfizer is marketing under license from a Japanese firm, is effective in treating Alzheimer’s disease.

* Other consumer-related stocks advancing included Alberto-Culver, up 7/8 to 39 1/4; Clorox, up 3/4 to 87 1/8; Dial, up 3/4 to 30; and Nike, up 7/8 to 80 1/4. But tobacco giant Philip Morris resumed its decline, dropping 2 3/4 to 86 3/4.

* Hilton Hotels sank 2 7/8 to 92 3/4 after the company warned that its first-quarter results may fall short of estimates because of high player winnings at baccarat in Las Vegas.

In overseas trading, the 225-share Nikkei stock index in Tokyo advanced 1.4% on heavy foreign buying after Wednesday’s holiday.