Lingering Inflation Worries Push Stocks Lower

Stocks slipped Thursday, even as interest rates backed away from 13-month highs, as inflation worries continued to prevail and a negative outlook in the computer industry dragged down that sector.

The Dow Jones industrial average fell 10.34 to 5,657.95, rebounding from a midday loss of 28 points as interest rates began to ease.

The Dow, a barometer of 30 big U.S. companies, has fallen every day this week, but less than 40 points overall, demonstrating investor confusion from mixed signals on inflation and interest rates.

“It’s reflective of the debate on whether the economy is too hot or too cold, and the realization that maybe it’s neither too hot or too cold,” said William Dodge, portfolio manager at Marvin & Palmer Associates Inc. of Wilmington, Del.

Declining issues outnumbered advancers by a 13-to-9 margin on the New York Stock Exchange, where volume totaled 379.62 million shares as of 4 p.m., down slightly from Wednesday’s pace.

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

NYSE

Philip Morris, up 1/4 at 104-3/8.

The food and tobacco company expects strong earnings gains this year as domestic and international cigarette sales continue to grow. Philip Morris also said it plans to buy back $2.8 billion in shares this year, compared with $2.1 billion last year.

McDonnell Douglas, down 1/8 at 48-3/4.

Rockwell International, up 1-3/4 at 58-7/8.

McDonnell Douglas is nearing an agreement to buy Rockwell International’s space and defense units, but the talks have been delayed by the machinists strike at McDonnell Douglas, The Washington Post said, estimating the price tag at $3.5 billion to $5 billion in stock and cash.

NASDAQ

Comdial, down 3-1/8 at 9-1/4.

The office telephone system provider expects an operating loss in the second quarter on a faster-than-expected drop in sales of older analog products. Comdial cited lower government sales because of uncertainty about the federal budget. Also, Comdial said it is considering a write-off of certain assets acquired in a recent deal.

Northstar Computer Forms, up 1-9/32 at 8-9/32.

Deluxe agreed to sell its financial forms and services unit to Northstar for an undisclosed amount of cash. Northstar said the purchase includes Deluxe products that generated close to $20 million in revenues in 1995.

AMEX

MacNeal-Schwendler, down 1/2 at 9-7/8.

The engineering software concern cut its quarterly dividend 62.5 percent to help build up cash for an aggressive growth effort. The new dividend of 6 cents a share, down from 16 cents, will be paid Sept. 4 to shareholders of record Aug. 16.