Stocks Drop in Heavy Trading; Dow Off 7.28
Hospital-management issues were the biggest losers as the stock market turned lower Wednesday, backtracking after a broad rally in the previous session.
The Dow Jones average of 30 industrials, up 12.32 on Tuesday, pushed ahead a few more points in early trading, but, by the close, it was down 7.28 at 1,333.67.
Volume on the New York Stock Exchange reached 147.33 million shares, up from 130.24 million on Tuesday and the heaviest total since a 159.92-million-share day on July 17.
Analysts said a mounting flow of takeover news and rumors had helped stir up a revived interest in stocks generally.
Hopes for Economy Pickup
They also noted persistent hopes for a pickup in the pace of the economy and an eventual improvement in corporate profits. The Commerce Department reported Wednesday morning that new factory orders rose 0.9% in August.
But a sharp drop in hospital-management stocks, which have a wide following among investing institutions, seemed to take the edge off traders’ enthusiasm.
Hospital Corp. of America tumbled 7 3/4 to 31 and led the active list on turnover of more than 3.8 million shares. On Tuesday, the company said it was likely to have flat earnings for the fourth quarter if recent downward trends in hospital utilization rates continue.
American Medical International, which reported lower quarterly profits, ranked second among the volume leaders and fell 4 to 17. Elsewhere in the health-care group, National Medical Enterprises slumped 2 3/8 to 20, Humana lost 3 to 25 3/4 and Beverly Enterprises dropped 3 to 31 7/8. American Hospital Supply was down 1/8 at 46 3/4.
A direct source of weakness in the Dow Jones industrial average was International Business Machines, which fell 2 to 124 3/8.
Recently strong oil issues generally showed fractional declines, with Exxon down 1/2 at 52 1/2 and Texaco off 1/2 at 37.
Directors Consider Options
On the plus side, Revlon climbed 4 to 54 3/8. Michel Bergerac, the company’s chief executive, said its directors met Tuesday night to consider several proposals for a takeover, buy-out or liquidation of the company.
Revlon is the target of a hostile takeover bid by Pantry Pride.
Midcon rose 3 1/2 to 60 on top of a 10 3/8-point jump Tuesday, which was fueled by intense takeover rumors and speculation.
Beatrice, another focus of takeover talk, gained 3/8 to 39 in active trading.
Gainers and losers ran about even in the daily tally on the Big Board.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,976, compared to 2,722 on Tuesday.
In the bond market, prices finished little changed as traders tried vainly to determine where interest rates are headed.
In the secondary market for Treasury bonds, prices of short-term maturities fell 1/32 point, intermediate maturities were unchanged and long-term issues were off by as much as 7/32 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.
Yields on 30-year Treasury bonds rose to 10.56% from 10.53% on Tuesday.
Among corporate issues, industrials and utilities fell point in light trading.
In the municipal market, general obligations and revenue bonds rose point in moderate activity.
In secondary trading of short-term Treasury securities, yields on three-month Treasury bills fell 4 basis points to 7%. Yields on six-month securities rose 16 basis points to 7.22%, while yields on one-year Treasury bills were unchanged at 7.38%. A basis point is a hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, traded at 7.875%, down from 8.25% on Tuesday.
