Stocks Decline on Year-End Profit Taking

A late wave of year-end profit taking pulled most stock measures lower Monday, denying several indexes record highs on the next-to-last trading day of 1996. Meanwhile, the dollar continued its rally against the Japanese yen.

The Dow Jones industrial average spent most of the session with a modest gain, but it was down 11.54 points at 6,549.37 by the closing bell, having held a gain of about 20 points just 15 minutes earlier.

“A lot of people are starting to look to more of the same in 1997: benign inflation and controlled growth,� said Tracy Chester, a money manager at Zurich Kemper Investments in Chicago, which oversees assets of $45 billion. “Unless you’re calling for a recession, or some sort of blowoff on inflation, which we’re not, it’s hard to make a negative case for the stock market.�

Broader market indexes also slid into Monday’s close, erasing gains that would have given some measures their first record highs in a month.

Stocks drew some early support from the bond market, where interest rates fell as the dollar rose in currency trading. A stronger dollar makes the payoff on U.S. investments more valuable in other currencies.

The benchmark 30-year Treasury bond yield rose to 6.54% from Friday’s 6.53%. Bond prices had risen earlier as the dollar surged, for a fifth day, to 116.15 yen in New York, the highest since March 1993, up from Friday’s 115.30 yen.

But the advance in the Treasury market was muffled by some potentially inflationary indications in Monday’s economic news.

The National Assn. of Realtors reported that sales of existing homes unexpectedly rose 1.8% in November, reversing a five-month string of declines. Many analysts had expected the tally to dip.

And the Conference Board research group said its gauge of future economic growth increased 0.1% in November.

The Standard & Poor’s 500-stock index fell 2.94 points to 753.85, and the NYSE’s composite index fell 0.68 point to 397.42. The American Stock Exchange’s market value index rose 1.53 points to 583.46.

The Nasdaq composite index dropped 3.63 points to 1,287.75 after scoring an early 5.63-point advance.

Among Monday’s highlights:

* Zitel, the day’s most active stock, collapsed 20 1/4 to 41 after climbing as high as 72 7/8 on speculation that billionaire investor George Soros was buying shares. The stock plunged when a person close to Soros said he had not been buying.

Likewise, other software makers trying to create programs to read the correct year after Dec. 31, 1999, plunged. TSR slid 7 1/2 to 30 after earlier rising to 50 1/4, Accelr8 Technology skidded 5 1/8 to 16 3/8 and Data Dimensions fell 4 1/8 to 33 5/8.

* A number of computer-related bellwethers remained under profit-taking pressure. Sun Microsystems fell 2 1/8 to 26 1/8, Intel fell 2 1/8 to 133 1/4 and Dell Computer fell 3 11/16 to 52 1/4. IBM fell 1 1/2 to 153 5/8 as the Dow’s weakest issue, and Compaq Computer fell 1 3/8 to 73 3/4.

Meanwhile, natural gas futures fell to their lowest prices in more than six weeks as forecasts for more mild weather in parts of the U.S. signaled further lackluster demand for heating fuels.