Stocks Decline Again; Dow Index Drops 4.71
Stocks extended their broad retreat in a turbulent session Friday, although prices rebounded from their worst levels.
The Dow Jones average of 30 industrials fell 4.71 to 1,307.68, giving it a weekly loss of 28.01 points. It was the average’s steepest drop since falling 32.26 points in the week ended Aug. 9.
Losers led gainers by about two to one on the New York Stock Exchange, whose composite index fell 0.51 to 105.85.
Big Board volume swelled to 111.39 million shares from 107.07 million Thursday.
At the American Stock Exchange, the market-value index skidded 2.13 to 224.59. That average tumbled 7.85 points in the week, or 3.4%.
Economic Reports
Several economic reports apparently failed to impress the stock market, although they drew a positive response from the bond market.
The Commerce Department said retail sales climbed 1.9% in August, the best increase since April. The latest gain largely reflected a surge in auto sales that analysts have attributed to low-financing incentives currently offered by the auto makers.
Separately, the auto makers said the incentives also helped early September sales soar 57% from a year earlier.
Industrial production rose 0.3% last month, the Federal Reserve Board said.
And, in a third government report, the Labor Department said wholesale prices fell 0.3% in August, the steepest decline in more than 2 1/2 years.
The stock market also was buffeted from continued futures-related selling by brokerage firms, who bought stock-index futures and sold the indexes’ underlying stocks to profit from their price differences.
But Alfred E. Goldman, vice president of A. G. Edwards & Sons in St. Louis, said that there also “were plenty of real liquidation programs by institutional investors” that were unrelated to the index strategies.
Revlon Down
Cessna Aircraft climbed 1 to 29 1/2 and topped the NYSE’s active list after agreeing to be acquired for $30 a share by General Dynamics, which fell 1 7/8 to 73 3/8.
Revlon lost 7/8 to 43 after Pantry Pride, unchanged at 6 1/2, revised its bid for Revlon to $42 a share from $47.50. The change followed Revlon’s own tender offer for 10 million of its shares designed to thwart Pantry Pride’s effort.
In the oil sector, Amoco fell 5/8 to 63 3/8, Chevron lost to 36 5/8 and Exxon was off 5/8 at 51 1/8.
Among banking stocks, Chase Manhattan fell to 51 7/8 and J. P. Morgan fell 3/8 at 46 5/8. But BankAmerica rose 5/8 to 14 after announcing plans to sell its headquarters in San Francisco for $660 million.
On the Amex, Petro-Lewis fell to 3 1/8 after a 1.1-million-share block crossed at 3.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 135.31 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,100, compared to 2,089 on Thursday.
Standard & Poor’s index of 400 industrials fell 0.89 to 204.05, and S&P;’s 500-stock composite index was down 0.78 at 182.91.
The Wilshire index of 5,000 equities closed at 1,888.344, down 10.257.
The NASDAQ composite index for the over-the-counter market closed at 287.21, down 2.72.
Bond Prices Rise
The inflation report was one factor helping the bond market, where prices of long-term Treasury bonds jumped more than a point, or $10 for each $1,000 in face value.
Bonds also were boosted after Ahmed Zaki Yamani, Saudi Arabia’s oil minister, was quoted as saying that the price of oil could slide to as low as $18 a barrel by January, Goldman said.
Industry sources said Yamani made the comment during a speech at the Oxford Institute for Energy Studies in England, but institute officials would not confirm the remarks because Yamani spoke “off the record.”
Regardless, the reported comment sparked fears that the U.S. financial system could be shaken because of its extensive loans to foreign oil producers and domestic energy concerns, Goldman said.
Those fears, in turn, prompted purchases of U.S. Treasury securities while depressing oil and banking stocks, he said.
In the secondary market for Treasury bonds, prices of short-term governments rose 14/32 point, intermediate maturities rose 31/32 point and long-term issues were up 1 16/32 point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.48 to 105.57. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 7.32 to 1,108.82.
In corporate trading, industrials and utilities rose 1 point in moderate trading.
Among tax-exempt municipal bonds, general obligations rose point and revenue bonds were up 3/8 point. Trading was moderate to heavy.
Yields on three-month Treasury bills were down 8 basis points to 7.20%. Six-month bills fell 11 basis points to 7.37%, and one-year bills were off 13 basis points at 7.55%.
