Stocks Extend Loss; Dow Falls 1.37 : Dollar, Rate Worries Cited; Late Buying Cuts Steep Drop
The stock market posted its second straight loss Wednesday amid worries about the outlook for the dollar and interest rates.
A late round of buying concentrated in blue chips enabled the market to finish well above its mid-session lows, however.
The Dow Jones average of 30 industrials, down about 20 points at one stage, finished with a 1.37-point loss at 1,829.61. The average took a 24.92-point drop Tuesday.
Volume on the New York Stock Exchange slowed to 149.69 million shares from 161.51 million on Tuesday.
Bonds Hit Again
The bond market also suffered another setback Wednesday as worries persisted that foreign buyers may shun U.S. securities. Interest rates, which move in the opposite direction of bond prices, climbed.
Furthermore, some observers believe that at some point the dollar’s drop might prompt the Federal Reserve to start trying to support the currency by moving toward a more restrictive credit policy. Brokers said those concerns were enough to prompt investors to cash in their gains from the market’s dramatic rise over the past seven months.
Bank stocks showed fractional losses. Citicorp dropped 3/4 to 61 5/8, Chemical New York 3/8 to 54 5/8, J. P. Morgan 3/8 to 85 3/4 and Chase Manhattan 3/8 to 48 1/8.
In the savings and loan sector, Great Western Financial fell 2 to 42 3/4 and H. F. Ahmanson 1/2 to 64 1/8.
Losers among the blue chips included American Express, down 2 1/2 at 62 7/8; Sears, down 5/8 at 44 3/8, and International Paper, down 1 1/2 to 59 3/4. By contrast, IBM rose 2 to 155.
Auto stocks were mixed as domestic car manufacturers reported a 23.5% decline in mid-April sales. Ford Motor lost 3/4 to 83 3/4 and Chrysler 1 5/8 to 38, but General Motors was up 1/2 at 81 7/8.
Black & Decker climbed 3 to 24 1/2 in active trading on merger rumors and speculation. The company said it knew of no explanation for the activity.
Eastern Airlines rose 1/2 to 8 5/8. There were reports that the company, which is slated to merge with Texas Air, has been approached by the Pritzker family of Chicago about a possible competing takeover bid.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,705, compared to 2,863 on Tuesday.
In the overall tally on the Big Board, about five issues declined in price for every three that gained ground.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 175.49 million shares.
Standard & Poor’s index of 400 industrials lost 0.45 to 301.00, and S&P;’s 500-stock composite index was down 0.67 at 241.75.
In the bond market, a strengthening in oil prices and continuing weakness in the dollar also undermined bond prices, analysts said.
The Treasury’s 30-year bond slid 1 1/2 points, or $15 for each $1,000 in face amount, to yield 7.46%. The bellwether bond had plunged nearly 3 points in Tuesday’s sell-off, and its yield had finished at 7.34%. The bond had recently been trading at yields ranging from 7.1% to 7.2%.
Japan Investors Key
Concerns lingered in the credit markets that the Japanese will stop pouring money into the U.S. markets. But so far there has been no detectable slowdown in Japanese funds, said Irwin L. Kellner, chief economist at Manufacturers Hanover Trust.
Analysts also said traders were nervously awaiting the outcome of the Treasury’s two-year note sale.
The auction of $9.8 billion in two-year notes produced an average yield of 6.68%, down from 7.19% at the last auction on March 19 and the lowest since 6.34% on July 19, 1977. The sale attracted bids totaling $18.3 billion.
In the secondary market for Treasury bonds, prices of short-term governments fell by between 11/32 point and 13/32 point and intermediate maturities dropped by between 1/2 point and 15/16 point. The 20-year bond lost nearly 2 points.
