Market Sags to 6-Week Low; Dow Drops 8.84

From Times Wire Services

The stock market sagged to a six-week low Thursday under the pressure of continuing interest-rate worries.

The Dow Jones average of 30 industrials, down 11.48 on Wednesday, fell another 8.84 to 1,271.53. That marked the average's lowest close since it stood at 1,270.43 on Jan. 24.

Volume on the New York Stock Exchange came to 112.10 million shares, down from 116.94 million Wednesday.

The market has been beset lately by concern over rising interest rates and fears that the upswing in rates has further to go.

That prospect was reinforced in many investors' minds when Chairman Paul A. Volcker of the Federal Reserve talked Wednesday of the possibility that the dollar might tumble from its recent lofty heights in foreign exchange markets.

Climbing Interest Rates

Analysts say a falling dollar would stand to dampen foreign investors' enthusiasm for U.S. securities like Treasury bills and bonds. That reduction of demand for interest-bearing securities could create significant upward pressure on interest rates in this country.

Interest rates continued to climb in the credit markets Thursday. Rates on short-term T-bills rose about 12 to 15 basis points, or hundredths of a percentage point.

Prices of long-term government bonds, which move in the opposite direction from interest rates, posted modest losses.

Traders got another apparently adverse signal for interest-rate prospects after the close when the Fed reported a larger-than-expected $3.6-billion increase in the basic measure of the money supply for the week ended Feb. 25.

Financial Corp. of America fell 1 5/8 to 6 on a volume of nearly 1.5 million shares, eighth most active on the New York Stock Exchange. The S&L; holding company said it planned to issue a statement before the start of trading today.

Apple Computer fell 2 1/2 to 22 1/8 in the over-the-counter market. The company announced plans to shut down production for a week because of excess inventories of personal computers.

American Natural Resources was actively traded, up 1 1/8 at 62 5/8. The company, which is the subject of an unwelcomed $60-a-share takeover bid by Coastal Corp., is reported to be looking for a white knight merger partner.

Crown Zellerbach jumped 2 1/2 to 38. The company has been rumored to be a possible takeover target of Sir James Goldsmith, the British financier.

Sperry, also the subject of takeover speculation, climbed 3/8 to 51 3/8 in active trading. Late in the day, the company issued a statement declaring that it was not involved in any merger talks.

Retailing issues were mostly lower as major companies in the industry reported February sales figures that analysts described as mixed.

J. C. Penney, which weighed in with a 4.1% sales increase, held steady at 47 1/2. But Sears, Roebuck dropped 1/8 to 34 3/4; K mart lost 3/8 to 34 3/4; Federated Department Stores fell 1 1/8 to 55 3/8, and Associated Dry Goods was down 3/8 at 56 7/8.

Bond Prices Lower

The daily tally on the Big Board showed about five losers for every three stocks that gained ground, and the exchange's composite index slipped 0.57 to 104.07.

Bond prices were mostly lower. Yields on three-month Treasury bills climbed 5 basis points to 8.74%. Six-month bills jumped 14 basis points to 9.08%, and one-year bills were up 6 basis points at 9.20%.

The federal funds rate, the interest on overnight loans between banks, traded at 8.563%, up from 8.24% late Wednesday.

In the secondary market for Treasury bonds, prices of short-term governments fell 2/32 point, intermediate maturities lost 5/32 point and long-term issues rose 4/32 point.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World