Market Can’t Sustain Rally; Dow Falls 4.85
The stock market pulled back a bit Thursday, running into some resistance after its recent gains.
But activity remained brisk in several issues involved in news or rumors of takeovers and other major business transactions.
The Dow Jones average of 30 industrials, which had closed Wednesday less than a point shy of a new high, dropped 4.85 to 1,880.20.
Volume on the New York Stock Exchange slowed to 134.07 million shares from Wednesday’s 161.79 million.
Analysts said the market was faced with selling after the Dow Jones industrial average approached the 1,900 level for the first time.
They said the importance of round-number points often is exaggerated, but some investors do use them in planning when to sell stocks.
Stocks also got little help Thursday from the bond market, where prices and interest rates closed little changed after a strong start.
Many Wall Streeters are still expecting another reduction in the Federal Reserve’s discount rate by midsummer. But brokers say it is uncertain how much the stock and bond markets might benefit from such a move, since it has been so widely discussed before the fact.
In the daily tally on the NYSE, declining issues slightly outnumbered advances. Large blocks of 10,000 or more shares traded on the NYSE totaled 2,476, compared to 3,036 on Wednesday.
ITT Gains From Talks
ITT Corp. climbed 3 to 52 3/8 and led the active list on volume of more than 3.8 million shares. ITT and France’s state-owned CGE confirmed that they are negotiating for CGE to acquire most of ITT’s phone switching equipment business, which is based in Europe.
American Brands, subject of takeover rumors and speculation, gained 4 to 96 1/2.
Panhandle Eastern, also heavily traded, added 3 1/8 to 44. The company attributed the rise to rumors that an investor or investors were accumulating a large position in the stock, but the company declined to comment on the rumors.
Hasbro, traded on the American Stock Exchange, slumped 2 to 57 1/2. The company said it would probably report lower earnings for the second quarter.
Disappointment over that news apparently touched off selling in the stocks of other toy companies traded on the Big Board. Tonka dropped 1 1/2 to 29 5/8, and Mattel slipped 3/4 to 12 1/2.
InterFirst fell 7/8 to 7 3/8. The company said Wednesday that it expects to post a second-quarter loss of at least $260 million, citing a large increase in its reserves for losses on energy loans.
Stride Rite gained 2 3/4 to 34 5/8 on sharply higher quarterly earnings.
Bond Prices Generally Higher
In the bond market, prices have moved generally higher this week in response to evidence that the economy remains sluggish.
That has led to the speculation that the Fed might relax credit conditions, encouraging lower interest rates.