Profit Takers Cash In on Rally; Dow Off 5.85
Stock prices posted some modest losses Wednesday as traders cashed in on gains from the market’s recent rally to record highs.
Trading slowed from its recent active pace.
The Dow Jones average of 30 industrials, which had closed at record highs in seven of the past 10 sessions, dropped back 5.85 points to 1,427.75.
Volume on the New York Stock Exchange came to 109.69 million shares, compared to 170.80 million on Tuesday.
Brokers said there was nothing special in the news to cause any abrupt change of mood among investors.
Rally Due for Respite
They noted that the market had traveled a long way in a short time, leading some participants to conclude that the rally was due for at least a brief respite. From Oct. 25 through Tuesday’s close, the Dow Jones industrials climbed more than 77 points.
In the early stages of the advance, buying was concentrated in big-name stocks like the Dow’s 30 components. In recent sessions, however, it broadened out to include many secondary issues.
Wednesday’s session opened with a round of selling. At mid-afternoon, the Dow climbed briefly to the plus side, then retreated again before steadying at the close.
In the economic news, the Federal Reserve reported that consumer credit outstanding grew at a 24.9% annual rate in September.
There has been some concern on Wall Street that consumers, who have been borrowing heavily and saving little in recent months, might soon run out of spending power, with a resultant slowdown of the economy.
However, a good part of the credit growth for September was ascribed to auto manufacturers’ below-market financing promotions, most of which have since ended.
Car sales, exceptionally strong during the promotional period, have lately weakened--as expected. Among the auto stocks Wednesday, Ford Motor rose 7/8 to 49, General Motors gained 3/8 to 69, Chrysler was unchanged at 42 and American Motors dropped 3/8 to 2.
F. W. Woolworth rose 7/8 to 55 3/4. The company reported third-quarter earnings of $1.20 a share, up from 82 cents in the comparable period a year ago.
Russ Berrie & Co., which also came in with higher quarterly profits, added 1 1/2 to 21 3/8.
H. H. Robertson fell 1 1/2 to 20 5/8. Late Tuesday, the company said it would omit its quarterly dividend.
In the bond market, prices pulled back after spurting ahead the previous session. Interest rates moved up slightly.
Prices stayed in a narrow range as traders awaited the government’s latest evaluation of the American economy.
The investment firm Salomon Bros. said prices of long-term government bonds slipped by between point and 9/32 point. On Tuesday, they finished up by nearly a full point, or $10 for every $1,000 in the bond’s face value.
