Stocks Close Session Slightly Lower : Dow Off 2.67 After Program Buying Trims Earlier Losses
The stock market closed slightly lower Monday, helped by a late burst of computerized program trading that wiped out much of what had been heavier losses during most of the day.
The Dow Jones average of 30 industrial stocks, down more than 7 points for most of the session, closed at 1,926.18, down 2.67 from Friday. With a half-hour to go, the index had been off by 9 points.
Declining issues outpaced gaining issues by about nine to five on the New York Stock Exchange, with 1,045 issues lower, 576 higher and 450 unchanged. Big Board volume totaled 157.61 million shares, down sharply from Friday’s record 244.68 million shares.
Ralph J. Acompora, an analyst at Kidder, Peabody & Co., said some program trading at the end of the session cut most of the losses in a market that was recovering from Friday’s 16-point rise. There was a lot of selling throughout the day, he said, because “the pop at the very end of the session Friday led to some unreal prices.”
(Friday’s “triple witching hour” occurs four times a year when stock index options, regular stock options and stock index futures all expire at the same time. On those days, traders must neutralize their holdings by the end of trading--which can easily lead to heavy waves of buying or selling.)
A leftover imbalance between the cash market and the nearby March Standard & Poor’s 500 stock index future contract encouraged some computerized program selling that helped pull the market down, said Michael Metz, an analyst at the Oppenheimer & Co. securities firm.
Worries Over Retail Sales
In the final half-hour, however, differences between stock index futures and their underlying stocks emerged again, kicking off some computerized buy programs that wiped out a good part of the day’s previous losses, he said.
Metz also cited “a lot of anecdotal evidence that retail sales were not going to be good” this holiday season, but he called it “a small negative influence” on the market.
Among the most active issues, Exxon was up 1/8 at 72 7/8, Mobil was up at 40 3/8, Amerada Hess was up 1/2 at 24 and Atlantic Richfield was up 1 at 61 3/4. The stocks benefited from the weekend’s price and quota agreement by the Organization of Petroleum Exporting Countries, analysts said.
Meanwhile, bond prices edged mostly higher in sluggish pre-holiday trading, as did short-term interest rates.
In the secondary market for Treasury bonds, prices of short-term governments edged up 2/32 point, intermediate maturities rose 5/32 point and long-term issues climbed 6/32 point, according to Telerate Inc., a financial data service. (The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.)
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, climbed 0.09 to 118.87. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 0.52 to 1,242.53.
In corporate trading, industrials and utilities were unchanged in quiet trading, according to the investment firm of Salomon Bros. Among tax-exempt municipals, general obligations rose point and revenue bonds were up 1/8 point in light trading, it said.
Yields on three-month Treasury bills in the secondary market rose 2 basis points to 5.54%. (A basis point is one-hundredth of a percentage point.) Six-month bills gained 5 basis points to 5.63%, and one-year bills inched up 1 basis point to 5.60%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.5%.
