Smoke Damage

Cigarette price cuts by Philip Morris help send the stock market tumbling

ON FRIDAY, PHILIP MORRIS SLASHED 40 CENTS OFF THE price of Marlboro cigarettes, reducing the average cost of a pack to $1.80. Admitting that this aggressive pricing could reduce earnings 40% this year, the company said it had to meet the challenge of discount and generic brands. Fears of a price war prompted Wall Street to dump tobacco stocks. Philip Morris shares plunged $14.75, to $49.38, and since the company is among the 30 firms whose stocks are in the Dow Jones Industrial Average, that bellwether index plummeted. A weak bond market and news that the unemployment rate remained at 7%...

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