Dow Loses 6.18 as New Scandal Upsets Traders
The stock market gave ground in active trading Thursday, with energy and semiconductor issues leading the retreat.
Brokers said word of new insider trading charges against three Wall Streeters unsettled investors.
The Dow Jones average of 30 industrials, up 13.92 on Wednesday, dropped 6.18 to 2,165.78.
Volume on the New York Stock Exchange reached 200.38 million shares, up from 172.35 million Tuesday.
Energy stocks dropped as oil prices weakened. Exxon fell 2 1/2 to 80 3/4, Amoco was down 2 5/8 to 73 3/4, Mobil lost 1 to 43 7/8, Chevron yielded 7/8 to 49; Atlantic Richfield fell 1 to 67 1/2 and Texaco dropped 3/4 to 38 1/2. Exxon, Chevron and Texaco are components of the Dow Jones industrial average.
Analysts attributed weakness in the semiconductor stocks to disappointment over the size of the increase reported late Wednesday in the industry’s so-called “book-to-bill ratio,” which compares values of new orders being received to products being shipped.
National Semiconductor lost 3/8 to 14 7/8, Motorola fell 1 3/8 to 48 and Texas Instruments dropped 3 7/8 to 155 1/8.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,812, compared to 3,488 Wednesday.
Bond Prices Rise
Bond prices rose in the credit markets as investors interpreted the retail sales report as a sign of economic weakness.
The Treasury’s 30-year bond was up 5/8 point, or $6.25 per $1,000 face value amount, while its yield declined to 7.55% from 7.61% late Wednesday. Corporate and municipal bonds were higher.
The bond market generally rises on signs of economic weakness, because the Federal Reserve Board is not expected to tighten credit when the economy is in a slump.
Bond prices and interest rates move inversely, so if interest rates decline, prices go up and traders make more on their investments.
T-Bill Yields Down
The federal funds rate, the interest charged on overnight loans between banks, traded at 6.0625% Thursday. On Wednesday it dropped sharply to 4% after trading in a 6.675% to 6.75% range.
