Dow Slumps 9.28 in Broad Setback : Analysts Blame the Approach of ‘Triple Witching Hour’
The stock market posted a broad loss Thursday, continuing its erratic behavior since it set new highs early this month.
The Dow Jones average of 30 industrials, up 16.03 on Wednesday, fell back 9.28 points to 1,923.65.
Volume on the New York Stock Exchange came to 135.99 million shares, against 139.67 million on Thursday.
Interest rates rose in the credit markets following the Commerce Department’s report of a larger-than-expected 0.5% rise in retail sales last month.
Excluding figures for automobiles, the department said, sales showed a 0.9% increase.
But while questions about the interest rate outlook might have disturbed some investors, analysts said, the main concern confronting the market was the approach of the quarterly “triple witching hour” on Dec. 19.
That date will mark the last trading in a set of stock-index futures, stock-index options and options on individual stocks.
On some, but not all, such occasions in the past, computer program trading involving the options and futures has contributed to wide swings in stock prices.
Investors have found it difficult to predict whether any given triple witching hour will be stormy or not.
The Dow Jones industrial average would have shown an even bigger loss Thursday had it not been for a 6 3/4-point jump to 51 in the stock of Owens-Illinois, which led the active list on turnover of more than 3.6 million shares. The company said the firm of Kohlberg Kravis Roberts & Co. approached it with a takeover proposal at $55 a share.
Losers among the blue chips included Exxon, down 3/4 at 69 3/4; Eastman Kodak, off 5/8 at 68 5/8; American Telephone & Telegraph, 1/2 lower at 26 3/4; General Electric, off 1 1/8 at 85 1/2, and Minnesota Mining & Manufacturing, 1 3/8 lower at 114 5/8.
Exxon said it reached an agreement to sell its Reliance Electric subsidiary, acquired in 1979, to a group of investors.
Retailing issues were broadly lower, showing no benefit from the government’s sales report. Sears, Roebuck lost 3/4 to 41 1/2, J. C. Penney fell 1 3/8 at 76 and K mart slipped 1/2 to 46 7/8.
There has been much discussion lately among analysts over the possibility that consumers, faced with high debt burdens and curtailed deductions for interest expenses, might cut back their spending in early 1987.
In the overall tally on the Big Board, declining issues outnumbered advances by more than five to two. The NYSE’s composite index of all its listed common stocks dropped 1.44 to 142.02.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,346, compared to 2,462.
Bond prices turned sharply lower after the government released the retail sales report.
The Treasury’s key 30-year issue fell about $6.25 per $1,000 face amount, with the yield rising to 7.36% from 7.31% late Wednesday.
In the secondary market for Treasury securities, prices of short-term governments were unchanged to 1/32 point lower, intermediate maturities fell 7/32 point and 20-year issues were off 11/16 point, according to the investment firm of Salomon Bros.
The federal funds rate, the interest on overnight loans between banks, traded at 5.875%.
