Dow Falls 10.40, Its First Decline of ’87
The stock market’s New Year rally stalled Wednesday, with the Dow Jones industrial average falling for the first time in 1987 in the face of broad market declines.
The average of 30 industrial stocks fell 10.40 to 2,094.07, snapping a record string of 13 consecutive daily gains for the widely watched market index.
Broad market indicators also retreated. About five issues fell in price for every three that rose in New York Stock Exchange trading, with 1,089 issues declining, 569 rising and 361 unchanged.
Prices fell early on profit taking by investors anxious to cash in gains made during the market’s steep rise since the beginning of the new year. Program trades made to capitalize on the disparities between stock index futures and the prices of the underlying shares also depressed stocks in the early going, analysts said.
Some stocks rebounded at midday, but the broad market remained weak and the selloff continued in late trading.
Many traders have been expecting a downward “correction” in the rally.
Nevertheless, while periodic profit taking was likely to continue, some analysts say the rally still has at least short-term strength.
“I think we’re closer to the end of the advance, but certainly this is not it,” said Michael Metz, analyst at Oppenheimer & Co. in New York. “It still looks like there are people out there who want to get in.”
IBM, down 2 1/2 on Tuesday, was unchanged at 122 3/4 in active trading. Among other technology issues, Digital fell 1/2 to 140, Unisys rose to 95 7/8 and Data General rose 1 1/8.
AMR fell 1 1/8 to 58 3/4. The parent company of American Airlines said its fourth-quarter earnings fell to 11 cents a share from 39 cents a year earlier. Among other airlines, UAL fell 1 1/2 to 56 1/2, Delta fell 3/8 to 54 3/4 and Pan Am dipped 1/8 to 5.
Carter Wallace rose 5 5/8 to 90. Other drug issues were mixed, with Pfizer down 1 to 64, Warner Lambert up 1 to 67 1/2 and Eli Lilly down to 81.
Home Shopping Network fell 4 to 34, leading the American Stock Exchange most-active list, while COMB Co. rose 2 to 30 1/2 in over-the-counter trading. Home Shopping has proposed a merger with the discount merchandiser.
An initial offering of Standard Federal Bank led the NYSE active list at 9 3/8, with 4.19 million shares changing hands. The shares were offered at 8.
A total of 3,451 blocks of 10,000 shares or more changed hands on the Big Board, down from 4,422 on Tuesday.
Bond Prices Mixed
Bond prices finished narrowly mixed. The Treasury’s bellwether 30-year bond finished off 6/32 point, or nearly $2 per $1,000 face amount, and its yield rose to 7.34% from 7.31% late Tuesday.
In the secondary market for Treasury bonds, prices of short-term governments were off 1/32 point, intermediate maturities were unchanged and 20-year issues were off 2/32 point, according to the investment firm of Salomon Bros.
In corporate trading, industrials were unchanged and utilities were off 1/8 point in light-to-moderate trading.
Among tax-exempt municipal bonds, general obligations were up point and revenue bonds were unchanged in light dealings.
Yields on three-month Treasury bills were up 6 basis points to 5.34%. Six-month bills fell 3 basis points to 5.31% and one-year bills were up 5 basis points at 5.42%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.125%, up from 6,0625% late Tuesday.
