Stock prices suffered a record-setting drop today in a frantic wave of selling that drove the Dow Jones Industrial Average down more than 86 points on a record volume of more than 237.57 million shares. The previous high was 236.57 million set on Aug. 3, 1984.
The Dow Jones average of 30 industrials plunged 86.61 points to 1,792.89, eclipsing the previous record point loss of 61.87 points on July 7 of this year.
Declining issues swamped advances by more than 10 to 1 on the New York Stock Exchange.
Today’s 4.61% drop in the average came nowhere near the 12.9% slide that occurred Oct. 28, 1929, in the worst day of the Great Crash of that year. But brokers said that came as little consolation to investors as they watched the market falling sharply and steadily through the day.
Bonds also plunged with the prices of key long-term government bonds, which move in the opposite direction from interest rates, dropping more than $20 for every $1,000 in face value.
The upswing in interest rates has been attributed to waning hopes that the Federal Reserve might take any further steps in the near future to relax its credit policy.
Recent economic statistics have suggested that business activity is picking up some momentum, and that the Fed is thus likely to feel less need to stimulate the economy.
At the same time, doubts persist on Wall Street that business conditions are improving enough to warrant expectations of any significant gains in corporate earnings.
Multi-point losses were common among the blue chips. An hour before the market closed International Business Machines was down 4 to 139 7/8; Ford Motor was off 3 at 54 7/8; Exxon had fallen 2 7/8 to 67, and Philip Morris was off 3 at 67.
Another sore point for the market was the news of top management changes at CBS Inc., which apparently brought an end to prospects that the company might be a takeover candidate. CBS shares fell 6 to 133 3/4.
The massive sell-off began as the market opened this morning, halted for a while around midday and then resumed.
Sharp one-day movements in the Dow average have become common place, but today was exceptional by any standards. Only last Thursday the 30-stock Dow Industrial Average hit an all-time peak of 1919.71.
John Connolly, market analyst at Dean Witter Reynolds Inc., said there did not appear to be any particular news item that could be blamed for today’s sudden decline.
“The market is probably trading on fear and emotion rather than any new information,” he said.
He noted that all markets were showing unusual volatility, with bonds and precious metals in a sharp decline. By contrast, the dollar was holding firm on currency markets.
“Investors are moving out of everything. It’s pure carnage out there,” said Jon Groveman of Ladenburg Thalman and Co.
E. F. Hutton’s Jack Conlon, director of institutional trading, described the atmosphere as “borderline maniacal.”
“It was frightening,” said Michael Driscoll, an options strategist for Prudential Bache Securities. “I’ve never seen anything like it.”