Analyst Cites Gore Speech for Dow, S&P; Slip

Drug and tobacco stocks dragged down the Dow and the Standard & Poor’s 500 on Friday in the wake of Democratic presidential nominee Al Gore’s acceptance speech, which was seen as a slap at those industries.

Gains in semiconductor shares gave way to losses among telecommunications equipment and biotechnology companies, sending the Nasdaq composite to its first drop in six sessions.

Pfizer, Merck and Philip Morris were among the main contributors to the S&P; 500’s loss.

“I think you can pin most of the decline in those stocks on the speech last night,” said Richard Cripps, chief investment strategist with Legg Mason Wood Walker in Baltimore. Recent gains in drug and tobacco shares also encouraged investors to sell the stocks to book profit.

The Nasdaq fell 10.53 points, or 0.3%, to 3,930.34. The S&P; 500 slipped 4.35 points, or 0.3%, to 1,491.72. The Dow Jones industrial average declined 9.16 points, or 0.1%, to 11,046.48.

More than four stocks fell for every three that rose on the New York Stock Exchange, where volume was light as many investors refrained from taking new stock positions before Federal Reserve policymakers meet Tuesday. Decliners edged advancers by 10 to 9 on Nasdaq.

“With a Fed meeting coming up, why do you make a big bet on a summer Friday?” said Arthur Hogan, chief market analyst at Jefferies & Co. The central bank has raised interest rates six times since June 1999.

For the week, the Nasdaq gained 3.7%, the S&P; 500 1.4% and the Dow 0.2%. All three have risen for three straight weeks and six weeks in eight.

In his speech, Vice President Gore said, “Big tobacco, big oil, the big polluters, the pharmaceutical companies, the HMOs--sometimes you have to be willing to stand up and say no, so families can have a better life.”

Treasury yields fell for the second straight day on expectations that inflation is tame enough to keep the Fed from raising interest rates.

Among the equity highlights:

* Philip Morris lost $1.88 to $32, trimming its gain this month to 27%. Pfizer dropped $1.25 to $42.75, Merck declined $1.94 to $72 and Schering-Plough slid $1.38 to $40.50.

* Finova Group fell $1.50 to $7.50 after its debt was downgraded by the Moody’s rating service.

* Chip stocks extended their rally. The Philadelphia semiconductor index rose 2.1%, bringing its six-day gain to 20%. But it is still down 10% since mid-July, when investors began to sell the shares on concern about a slowdown in sales growth.

Varian Semiconductor Equipment Associates gained $3 to $50.69 after a Lehman Bros. analyst raised the stock to “buy” from “neutral.”

Novellus Systems climbed $4.19 to $59.88, Lattice Semiconductor rose $4 to $67.63 and Teradyne gained $3.56 to $66.88.

Elsewhere in the tech sector, Sun Microsystems rose $2.94 to $122.38 and JDS Uniphase rallied $2.63 to $122.88.

But Teligent fell $1.44 to $13.19 after a Prudential analyst cut the shares to “hold” from “strong buy.” The telecom stock traded for $97 in mid-March.

* In the initial public offering market, WJ Communications (ticker symbol: WJCI) of Palo Alto jumped $16.25 to $32.25 in its Nasdaq debut.

* Among Southland stocks, Conexant Systems of Newport Beach rose $1.63 to $39.13, bringing its gain for the week to 39%. Western Digital of Irvine rallied $1.25 to $5.63.

In foreign trading, Mexico’s main index lost 2.3% and Brazil’s dropped 2.2%.

Market Roundup, C4