Stocks Skid on Broad Front; Dow Loses 7.05
Stocks skidded to a broad loss for the third consecutive session Thursday, pushing the Dow Jones industrial average to a 2 1/2-month low.
The Dow Jones average of 30 industrials fell 7.05 to 1,312.39, its lowest level since June 20, when it stood at 1,299.73. The average is off 23.30 points so far this week.
Interest-rate-sensitive financial issues came under notable pressure. Airline, retail, auto and telephone stocks also retreated.
Losers swamped gainers by nearly three to one on the New York Stock Exchange, whose composite index lost 0.86 to 106.36. NYSE-listed issues hitting 52-week lows outpaced those reaching new highs by 40 to 19.
Big Board volume totaled 107.07 million shares, against 100.38 million Wednesday.
‘Sell Programs’ Abated
Futures-related “sell programs” by brokerage firms, a key contributor to Wednesday’s steep loss, initially abated Thursday but reappeared in late dealings, traders said.
Recently the prices of certain stock-index futures contracts have been selling at a discount to the indexes themselves. So the firms have been buying the futures and selling the indexes’ underlying stocks to take advantage of the price spread.
Regardless, “the market’s inability to rally when there are no programs is just as revealing as the selling generated by the programs,” Newton D. Zinder, senior vice president of E. F. Hutton, wrote in his daily market report.
The market’s underlying weakness reflects stepped-up selling by money managers and individual investors who are concerned about the outlook for the economy and corporate earnings, traders said.
In the rate-sensitive financial sector, Chase Manhattan fell 1 3/8 to 52 1/8, Household International dropped 1 1/8 to 33 7/8 and Manufacturers Hanover was off 1 1/8 at 35 1/8.
A new issue, Rockefeller Center Properties, topped the NYSE’s active list and closed at 19 3/4 after being initially offered at 20. About 9.7 million shares changed hands, including a 1.56-million-share block at 20.
Elsewhere on the list, Westinghouse rose 1/2 to 38 5/8, Revlon climbed 7/8 to 43 7/8, Kansas Gas & Electric skidded 2 to 11 7/8 and International Business Machines lost 1/8 to 127 1/8.
Arkla Takeover Rumored
Arkla jumped 1 3/4 to 22 in heavy trading amid unconfirmed rumors that Arkla was in talks to be acquired by Sonat, another natural gas pipeline company. Sonat fell 1 to 33 1/8.
Colgate-Palmolive rose to 26 1/8 after raising its dividend. The company, which recently bought back 12 million of its shares, also said that its board authorized the repurchase of an additional 3 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,089, compared to 1,770 on Wednesday.
Bond prices were lower. In the secondary market for Treasury bonds, prices of short-term governments fell 6/32 point, intermediate maturities fell 10/32 point and long-term issues were down 11/32 point, according to Salomon Bros.
In corporate trading, industrials and utilities fell point in light trading.
Among tax-exempt municipal bonds, general obligations fell 1/2 point and revenue bonds were down 1/2 point. Trading was moderate.
Yields on three-month Treasury bills were up 4 basis points to 7.28%. Six-month bills rose 6 basis points to 7.48% and one-year bills were up 6 basis points at 7.68%. A basis point is one-hundredth of a percentage point. Yields on 30-year Treasury bonds rose to 10.76% from 10.72% on Wednesday.
The federal funds rate, the interest on overnight loans between banks, traded at 7.938%, up from 7.75% on Wednesday.