Dow Slides 13.36 on Profit Taking : Market Stuck in ‘Year-End Crosscurrents,’ Analysts Say
The stock market closed down broadly after hovering moderately lower for most of the session Tuesday.
The Dow Jones average of 30 industrial stocks fell 13.36 to 1,916.90.
On the New York Stock Exchange, losers outpaced gainers by nearly two to one, with 1,029 issues down, 531 up and 473 unchanged.
Volume totaled 128.69 million shares, compared to 158.98 million on Monday. Analysts said year-end tax-related selling added to profit taking that was still continuing after the 43.03-point surge on Dec. 2 to a record 1,955.57.
“The market has been overbought and was overextended,” said Hildegarde Zagorski, analyst at Prudential-Bache Securities, who cited profit taking as the main reason. “We also had a soggy bond market, which didn’t help,” she added.
Although Monday’s gain was the Dow industrials’ first positive close since Dec. 2, the overall balance of declining issues against gainers was still weighted downward, leaving the market’s near-term direction an open question.
Some analysts have said that the index’s inability to follow through on the Dec. 2 performance was in part because of continuing worries over potential bad news emanating from the Iranian arms imbroglio and the insider trading scandal.
They also said that a lack of consensus about the near-term outlook for stocks left many reluctant to make significant buy commitments Tuesday.
Some Still Bullish
But others, including Zagorski, said they remained bullish, predicting that the Dow would push through the 2,000-level by year-end.
“When the market goes down, people look for reason. They say, ‘Hey, it’s the scandal.’ But when it goes up, they forget about that,” she observed.
At E. F. Hutton & Co., analyst Jeffrey S. Weiss noted that the market has endured plenty of bad news already, only to move on to new gains.
Tuesday’s activity was due to “year-end crosscurrents. But when all is said and done, we’ll be at new highs” by year-end, he said.
Among most active issues on the Big Board, British Gas PLC, which was first offered on Monday, declined to 8 7/8. Pacific Gas & Electric slipped 1/2 to 24 3/8 and Allegheny Power System was down 1/8 at 47.
Carter Hawley advanced 1 to 48 1/2. It had fallen 5 7/8 on Monday after the Limited-DeBartolo Group dropped a takeover bid.
Philip Morris was up 1 at 74, BankAmerica rose 3/8 to 15 and Philips Petroleum gave up 1/8 to close at 10 3/4.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 159.91 million shares.
In the secondary market for Treasury bonds, prices of short-term governments slipped 1/32 point, intermediate maturities fell 2/32 point and long-term issues were off 6/32 point, according to the Salomon Bros.
Yields on 30-year Treasury bonds edged up to 7.34% from 7.31% on Monday.
