Dow Falls 1.83 in Drifting Session : Report on Trade Deficit Worse Than Market Expected
All U.S. stock and commodity markets will be closed Monday in observance of Labor Day. There will be no Business section Monday; Monday’s regular features and tables will appear in Tuesday’s Business section.
Stock prices drifted in a narrow range Friday, closing out a month of sharp gains on a hesitant note.
The Dow Jones average of 30 industrials dropped 1.83 to 1,898.34, trimming its gain for the week to 10.54 points.
Volume on the New York Stock Exchange came to 125.27 million shares, against 125.08 million on Thursday.
Before the market opened, the government reported a record $18.04-billion merchandise trade deficit for July.
The figure substantially exceeded advance estimates on Wall Street and was taken as fresh evidence of a continuing weak competitive position for U.S. industry.
After a brief advance in the early going, stocks began to retreat. Stock market participants evidently found the absence of any progress on shrinking the trade deficit a cause for new concern about the outlook for corporate profits.
Also, brokers said some traders apparently were leery of carrying large positions into the long Labor Day weekend.
Nevertheless, the Dow Jones industrial average finished August with a net gain of 123.03 points, recouping the 117.41-point loss it suffered in July.
Owens-Corning Fiberglas fell 1 5/8 to 79 1/8 in active trading. Wickes Cos. dropped its $74-a-share tender offer for the company’s stock after Owens-Corning moved to fight it with a recapitalization proposal.
Lockheed lost 1 1/8 to 48. The Air Force said Thursday that the company had apparently overcharged the government for work on military transport aircraft.
Digital Equipment gained to 101. The company is reported to be ready to introduce a personal computer that is compatible with International Business Machines’ personal computers.
Ohio Edison led the NYSE active list, up 1/8 at 22 3/8. Analysts attributed the activity to buying by investing institutions and professional traders with the intent of capturing the company’s quarterly dividend. The stock goes ex-dividend--begins trading without the right to receive this quarter’s payout--on Tuesday.
Auto stocks were weak for the second straight day as Chrysler joined General Motors in offering a new sales incentive plan for car buyers. GM dropped 1 to 72, Ford Motor 1 7/8 to 59 3/4 and Chrysler 1 to 38 3/4.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 147.68 million shares.
Standard & Poor’s index of 400 industrials slipped 0.05 to 278.14, but S&P;’s 500-stock composite index was up 0.09 at 252.93.
In the credit markets, bond prices pushed higher and short-term interest rates declined in thin trading after the government released the trade deficit figures and a report that new single-family home sales fell during July.
In the secondary market for Treasury issues, long-term maturities posted some of the biggest gains.
The 30-year Treasury bond rose about 1/2 point to yield 7.21%, down from 7.26% late Thursday. The 20-year issue rose 7/8 point.
Among tax-exempt municipal bonds, general obligations and revenue bonds were up a point. Trading was light to moderate.
Yields on three-month Treasury bills were down 14 basis points to 5.15%. Six-month bills fell 16 basis points to 5.16%. One-year bills were down 15 basis points at 5.38%. The federal funds rate, the interest on overnight loans between banks, traded at 5.688%, down from 5.813% late Thursday.
