Stocks Fall in Sluggish Trading; Dow Off 4.82
Investors returned from the Labor Day holiday in a somewhat bearish mood, pushing stocks to a broad decline in sluggish trading Tuesday.
Prices trimmed their losses in the final hour, however.
The Dow Jones average of 30 industrials dropped 4.82 to 1,329.19 after having been down about 9 points earlier in the session.
Declines outpaced advances by two to one on the New York Stock Exchange, with oil, financial, paper, drug and airline issues the notable losers. Big Board volume totaled 81.19 million shares, against 81.62 million on Friday. There was no trading on Monday, Labor Day.
The market’s setback and the lackluster activity extended the generally weak performance that stocks displayed during August, which brokers attribute largely to investors’ uncertainty about the economy’s outlook.
Some analysts expect economic growth, which was modest in the first half of the year, to accelerate in the latter stages of 1985. But recent economic indicators have been mixed, leaving many Wall Streeters doubtful as to whether that scenario will take place.
“People have not made up their minds yet, but the trend seems to be down,” said Alan C. Poole, market strategist at Laidlaw, Adams & Peck. “Therefore, I expect that, when trading does pick up, it’s going to accelerate the downside of the market.”
A trade group added support to those who think that the economy remains in a downward trend. The National Assn. of Purchasing Management, representing corporate buying agents, said a survey of its members indicated that the economy weakened further last month.
Avoided Severe Slide
Still, some traders noted that the market has avoided a severe slide, signaling that investors remain hopeful that the economy will pick up steam in the coming months.
The Commerce Department, meanwhile, said construction spending climbed a moderate 1.2% in July after falling 0.6% in June.
Travelers fell 3/8 to 41 and topped the NYSE’s active list after a 3.9-million-share block crossed at 41 3/8. The stock was a new offering that Travelers sold as a block to Morgan Stanley, the issue’s underwriter.
The decline in airline issues contributed to a 4.10-point decline, to 686.56, in the Dow Jones transportation average.
The losses came after Edmund Greenslet, an industry analyst at Merrill Lynch, downgraded his ratings for several of the carriers. Eastern Airlines dropped 5/8 to 10 1/8, Delta lost 5/8 to 45 and UAL skidded 1 1/2 to 53 1/2.
SCM surged 5 to 72, a 52-week high, after Hanson Trust PLC sweetened its acquisition bid to $72 a share from $60. Earlier, SCM and Merrill Lynch had announced a definitive agreement for a $70-a-share leveraged buy-out of SCM. Merrill Lynch fell 7/8 to 30 7/8.
CBS slipped to 113 3/4. The broadcaster said it would offer early retirement to about 2,000 employees, or 7% of its work force, as part of a streamlining effort.
Union Carbide fell 1 3/4 to 55 1/2; a 900,000-share block traded at 56.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 100.86 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,415, compared to 1,462 last Friday.
Standard & Poor’s index of 400 industrials fell 0.84 to 208.85 and S&P;'s 500-stock composite index was off 0.72 at 187.91.
The Wilshire index of 5,000 equities closed at 1,944.114, down 8.987.
At the American Stock Exchange, the market-value index fell 1.67 to 233.58.
NASDAQ Closes Down
The NASDAQ composite index for the over-the-counter market closed at 296.56, down 1.15.
Most bond prices rose in quiet, trendless activity as traders awaited more information on the course of the economy and the growth rate of the money supply.
Slim gains in the government securities market halted a steep slide that began before the long holiday weekend.
In Friday’s sharp retreat, long-term bonds tumbled 1 point, or $10 for each $1,000 in face value. Credit markets were closed Monday in observance of Labor Day.
Yields Edge Up
Analysts said traders now are waiting for the government’s monthly unemployment report, scheduled for Friday, and the Federal Reserve’s weekly money supply figures, set for release Thursday.
A resurgence of economic growth at a time when money supply growth is above the Fed’s anti-inflation range would dim hopes for further declines in interest rates, the analysts said.
Yields on three-month Treasury bills edged up to 7.14% in the secondary market, a gain of 1 basis point from Friday. Six-month bills fell 3 basis points from Friday to 7.31%, and one-year bills were off 4 basis points at 7.46%. A basis point is one-hundredth of a percentage point.
In the secondary market for Treasury bonds, prices of short-term governments were unchanged to up 1/32 point from Friday’s late level, intermediate maturities were unchanged to up 5/32 point and long-term issues were up between 2/32 point and 4/32 point, according to the investment firm of Salomon Bros.