Market Plagued by Oil Worries; Dow Off 12
The stock market suffered a broad decline Wednesday as traders continued to dwell on the potentially harmful consequences of weak oil prices.
The Dow Jones average of 30 industrials drifted at moderately lower levels much of the session until the final hour, when the sell-off accelerated. At the end of the session, the blue chip barometer stood at 1,502.29, down 12.16 from Tuesday’s closing level.
Losers outnumbered gainers by about two to one on the New York Stock Exchange, where volume expanded to 131.18 million shares from 128.31 million shares Tuesday. The NYSE composite index of all its listed common stocks fell 1.20 to 117.75.
The blue chip sector was dragged down for a second straight day by sober thoughts about what lower oil prices might mean for oil companies and banks that have energy-related loans on their books. But other stocks faltered, too.
Market leader International Business Machines tumbled 5 to 144 in heavy trading.
Much of the technology group encountered selling pressure. Digital Equipment dropped 5 1/8 to 144 3/8, Data General 1 1/2 to 41, Hewlett-Packard 1 1/8 to 39 3/8 and Computervision 1 to 12.
The Dow industrial index would have fallen further if not for a strong performance by Union Carbide, one of its components. It jumped 4 1/8 to 79 1/2, aided by a “strong buy” recommendation from a Kidder, Peabody & Co. analyst.
Some of the stocks battered in Tuesday’s session fared little better Wednesday and were among the volume leaders.
In the banking group, Citicorp fell 1 7/8 to 47 5/8 and BankAmerica rose 3/4 to 13, both in active trading.
Other banking stocks hit hard by selling included Chase Manhattan, down 4 3/4 to 70. It said it is buying two businesses from BankAmerica. Manufacturers Hanover declined 3 to 42 1/8.
Among the actively traded oil and oil services stocks, Exxon slipped 3/8 to 49 7/8, Mesa Petroleum dipped to 2 1/2, Mobil was unchanged at 29 3/4, Diamond Shamrock fell 1/8 to 13 3/8 and Schlumberger slid 7/8 to 32 5/8.
Although oil prices seemed to stabilize Wednesday, the recent slide has pushed prices down about 18% over the past week. Oil prices are now about 35% below November levels.
The market has been ignoring the fact that low oil prices will help keep inflation under control, analysts said.
Michael Metz, a vice president at Oppenheimer & Co. in New York, said petroleum prices have fallen so rapidly that the oil market is chaotic, something that has unnerved stock traders trying to sort out all the possible consequences.
“The stock market is still trying to adjust to the free-fall in oil prices,” Metz said, commenting on Wednesday’s activity on Wall Street.
