Market Retreats Again; Dow Falls 9
Wall Street was still searching for its first gain of 1985 as the stock market staged a late retreat Thursday to scuttle an attempt at a rally.
Analysts attributed the weak performance to worries about the course of the economy and interest rates and to investor disappointment that the stock market failed to hang on to its mid-session gains.
The Dow Jones average of 30 industrials, down 12.70 points Wednesday, fell another 9.05 points to close at 1,189.82. It was the lowest finish for the stock market’s best-known indicator since Dec. 17, when it closed at 1,176.79.
The blue-chip average began the session by falling 4.52 points, then rebounded to post a gain of 2.76 points before tumbling in the final 90 minutes of trading.
On Wednesday, rising interest rates contributed to a slide in stock prices in the first trading session of 1985.
Many analysts have said it is likely that interest rates will rise further as credit markets are asked to absorb a flood of federal borrowing to meet huge budget deficits at a time when renewed economic strength is expected.
Raymond DeVoe Jr., an analyst at Legg Mason Wood Walker, said that traders already concerned about the strength of the economy and the direction of interest rates were further discouraged by a rash of reports by investment houses that reduced 1985 earnings estimates for the companies they follow.
Wang Laboratories class B stock, the most active issue on the American Stock Exchange, fell 1 1/2 to 23 7/8. A computer industry analyst at Goldman, Sachs & Co. reduced his earnings estimate for Wang and recommended the sale of the company’s stock.
International Business Machines fell 1 to 120 and was the most active issue on the NYSE. Nearly 1.4 million shares changed hands.
With crude oil prices at five-year lows in the spot, or non-contract, market, oil industry service issues were under pressure.
Schlumberger fell 1 3/4 to 36, Halliburton slid 1 to 27 1/2, Baker International was off 1/8 at 16 1/8 and Gearhart Industries fell 1/8 to 11.
With gold hovering around $300 an ounce and precious metals prices at 2 1/2-year lows, mining stocks also faltered.
Sunshine Mining was off 1/8 at 8, Campbell Red Lake dropped 1/2 to 17 and Homestake Mining fell 1/8 to 20 7/8.
Bond prices rebounded, regaining some of the ground lost in Wednesday’s sharp sell-off.
Yields on 30-year Treasury bonds fell to 11.61% from 11.74% late Wednesday but remained above the 11.54% of Monday.
The rebound occurred as the Treasury Department sold $4.28 billion in 19-year, 10-month bonds at an average yield of 11.86%.
That was up from the 11.69% yield on a similar issue auctioned Oct. 30, 1984, but well below the 13.76% yield on a similar issue July 10, 1984.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point, intermediate maturities rose 1/2 point to 7/8 point and long-term issues were up a full point.
In corporate trading Thursday, industrials and utilities rose 1/2 point in light trading.
Among tax-exempt municipal bonds, general obligations rose point and revenue bonds rose 5/8 point.
Yields on three-month Treasury bills fell 4 basis points to 7.79%. Six-month bills fell 4 basis points to 8.14% and 1-year bills were off 5 basis points at 8.44%.
The federal funds rate, the interest on overnight loans between banks, traded at 8.5%, down from 11% late Wednesday.
