Stocks Drop in Listless Session; Dow Falls 1.99
Stock prices pulled back Tuesday as traders remained preoccupied with the outlook for interest rates, oil prices and the dollar.
The Dow Jones average of 30 industrials wavered near Monday’s closing level during an indecisive session and finally finished with a modest loss of 1.99 at 1,785.34.
Strength in a handful of blue chips kept the indicator from sliding more. Merck jumped 3 1/8 to 182 1/8 and McDonalds 1 1/2 to 101, for instance.
Declines exceeded advances by 906 to 659, and 424 issues were unchanged in the overall tally on the New York Stock Exchange. Trading volume eased to 119.16 million shares on the Big Board from 125.36 million on Monday.
Brian Luedtke, an analyst for Piper, Jaffray & Hopwood in Minneapolis, said the market may stay stuck in a narrow range until investors see the benefits of lower interest rates and oil prices show up on corporate balance sheets.
Searching for Leadership
“Right now the market is searching for some type of leadership,” Luedtke said, adding that some analysts have been counting on technology and energy stocks to lead the market on a renewed charge to higher ground. But those groups have failed to point out an upward path. For example, International Business Machines lost 1 1/8 to 148 7/8 on Tuesday.
Sperry was the volume leader and fell 5/8 to 72 3/8. Burroughs, which slid 1 1/2 to 59, has offered to buy Sperry for $70 a share.
Concerns about the consequences of the dollar’s drop and about the economy have impaired the market’s recent performance, analysts said. The dollar has been sinking against other major currencies and has repeatedly hit record post-World War II lows against the Japanese yen. Analysts also said investors were worried that oil prices have steadied and will rebound as demand grows during the summer motoring season.
Uncertainties over the economic outlook and the proposed tax reform before Congress have also unsettled investors.
Auto stocks stalled. General Motors dropped 1 1/8 to 76 1/2, Ford 1 5/8 to 78 and Chrysler 1 5/8 to 36 7/8.
J.C. Penney Gains
American Brands sagged 4 3/8 to 88 5/8. Analysts have recently cast doubt on market rumors that the company would be acquired by BAT Industries, a British concern.
Retail stocks received buyers’ attention. J. C. Penney rose 1 1/8 to 75 7/8. The retailer reported an increase in earnings for its first quarter ended April 26 over the same period of last year. Federated Department Stores rose 1 to 79. Woolworth went up 1 3/8 to 80.
In the bond market, prices jumped as interest rates eased after statements by Treasury Secretary James A. Baker III and Federal Reserve Board Chairman Paul A. Volcker suggesting the desire for stable currency-exchange rates.
The Treasury Department’s bellwether 30-year bond, which declined sharply Monday, rose nearly 1/2 point, or $5 for every $1,000 in face value, and its yield fell to 7.40% from 7.44%. Other shorter-term securities rose as much as 1 point in price.
