Inflation Jitters Spoil Final Day Of Sweet Year

The Dow Jones industrials dove 101 points Tuesday, ending a sweet year on a sour note as some unexpectedly strong economic data raised doubts about whether inflation and interest rates will remain tame in 1997.

The Dow fell 101.10, or 1.5 percent, to 6,448.27, shaving its gain for 1996 to 26 percent. Paired with 1995’s stellar 33.5 percent advance, it was the best two-year showing for the barometer of 30 big U.S. companies in 20 years.

Most broad-market measures tumbled over the last hour too, capping this year’s surprising encore to 1995’s rally with an air of uncertainty. The market has never put together three consecutive years with such broad gains.

The Dow’s slide was its biggest one-day point drop since a 161-point plunge on July 15, which came amid a near-panic over inflation and earnings worries. Inflation jitters were also the main culprits on Tuesday.

Stocks dropped with bonds in the morning after the Commerce Department said new home sales shot up 14.2 percent to 772,000 in November. In a separate report, meanwhile, the Conference Board research group said consumer confidence rose sharply to a seven-year high in December.

“The sellers were dealing with a vacuum in the absence of buyers,” said Ned Riley, chief investment officer for the Bank of Boston, noting that the late downturn was aggravated by investors who were “desperate to do some year-end tax sell or take some gains.”

Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange, where volume totaled 395.21 million shares as of 4 p.m., up from 339.01 million on Monday.

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

NYSE

Iomega, up 1-3/8 at 17-3/8.

The computer drive maker plans to shift manufacturing operations to Malaysia, eliminating 500 to 700 jobs at its Roy, Utah, facility.

Gillette, up 2-1/8 at 77-3/4.

The Boston-based shaving giant’s $7.3 billion purchase of battery maker Duracell International was approved by shareholders at both companies.

Renaissance Group, up 7-1/8 at 23-1/2.

Phoenix-based Doubletree agreed to acquire Renaissance in a transaction valued at about $850 million, including stock, cash and the assumption of $70 million in debt.

NASDAQ

SanDisk, down 1-1/2 at 9-3/4.

The maker of flash storage cards for computers expects fourth-quarter revenue to be flat with third-quarter revenues.

American Eagle Outfitters, down 2-7/8 at 7-7/8.

The Warrendale, Pa.-based retailer expects fourth-quarter earnings to fall short of analyst estimates as a result of a 16.9 percent decline in December sales at stores open at least a year.