Smoke Damage

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% in March helped intensify the rout on the Big Board. The Dow was down nearly 69 points on the day, to close at 3370.81.