Stock Market Drifts Lower; Dow Slips 2.42
The stock market closed out a quiet, drifting session Monday with some spotty losses.
The Dow Jones average of 30 industrials, which had climbed 36.06 points on Friday, slipped back 2.42 to 1,871.77.
Volume on the New York Stock Exchange slowed to 112.12 million shares from 141.20 million on Friday.
Analysts said a recent spate of data signaling continuing weakness in the economy has revived hopes for lower interest rates.
Rates fell sharply in the credit markets Friday. In Monday’s activity, long-term government bond prices pushed ahead as the credit markets managed to maintain some of last week’s upward momentum.
The Treasury’s key 30-year bond rose point, or $2.50 for each $1,000 in face amount. That lowered its yield to 7.45% from 7.47% late Friday. But prices of shorter maturities were mixed. Short-term interest rates finished the day slightly above late Friday’s levels.
Semiconductors Weak
Among the blue chips, Sears, Roebuck rose to 47 1/2, American Telephone & Telegraph climbed to 25, and General Electric was up 3/8 at 82 1/8. But International Business Machines lost 1 1/8 to 148 1/2 in a generally weak technology sector.
Among semiconductor issues, Motorola fell 2 to 40, Texas Instruments fell 3 3/4 to 126 and National Semiconductor dropped to 12 3/4.
Selling in computer and semiconductor stocks was attributed to concern that the delay in the hoped-for pickup in the economy would mean continuing earnings disappointments in those businesses.
EG&G; fell 1 5/8 to 34 1/8. The company said it was growing less confident that it will have a record year in 1986 because its commercial businesses haven’t lived up to its hopes so far.
Skyline Corp. dropped 7/8 to 14 7/8. The company reported a quarterly earnings increase that evidently fell short of investors’ expectations.
In the bond market, dealers were awaiting a report on home building from the Commerce Department due today as well as a Treasury announcement on its borrowing plans for the rest of the quarter.
Most bond market attention was directed toward the Treasury’s scheduled financing announcement. Analysts expect the package to include two auctions totaling $15 billion to $16 billion in medium-term notes to be sold next week.
In the secondary market for Treasury securities, prices of short-term governments ranged from a drop of 1/32 point to a rise of 1/16 point and intermediate maturities were unchanged to up 3/32 point, according to the investment firm of Salomon Bros. The 20-year bond gained a full point. The bond is in greater demand because the Treasury will not be issuing any more of them.
