Falling Dollar Hurts Stocks; Dow Dips 0.42
Stock prices, which spent much of the week following the direction of the dollar and the Treasury bond market, continued in that vein Friday and closed lower.
The Dow Jones index 30 industrial stocks fell 0.42 to 2,338.78.
Declining issues outpaced advancing issues by a two-to-one margin.
Big Board volume totaled 169.53 million shares, against 180.25 million in the previous session.
The dollar reached another low against the Japanese yen Friday, and it also slipped against other major currencies.
The bellwether 30-year Treasury bond, down more than 2 points Thursday, was off another 1 5/32 point Friday, or just over $11 per $1,000 in face value. Its yield jumped to 8.18% from 8.08%. Two weeks ago, the 30-year bond yielded in the range of 7.5%.
Wall Street analysts said the stock market followed the bond market closely, as it had done in previous sessions.
Jack Solomon, an analyst with Bear, Stearns & Co., said some of the buying came from program traders and investors looking for bargains after stock prices dropped sharply on Thursday. The Dow tumbled nearly 33 points in that session.
Topping the NYSE most active list Friday was Franklin Resources, which fell 1 3/4 to 44.
HCA Stock Jumps
Hospital Corp. of America, which said Thursday that it had received a $47-a-share takeover bid, shot up 3 1/2 to 41 5/8.
The price of gold soared Friday to its highest prices in six months and gave mining stocks a boost. Hecla Mining rose 1 to 22 3/4 and Dome Mines was up 1/2 to 14.
Technology stocks also performed well on news that the semiconductor industry’s book-to-bill ratio in March reached its highest level since 1984. Digital Equipment picked up 4 1/2 to 166 1/8 and Texas Instruments was up 3 1/8 to 199 7/8. IBM gained 1 to 145.
Among other gainers was General Motors, which rose 2 3/4 to 86. GM executives told Wall Street analysts they expect the auto maker to maintain about a 40% share of the auto market.
Among the declining issues were UAL, which fell 1 1/8 to 72 1/8, Eastman Kodak, which slipped 1 3/8 to 75 7/8 and Southwestern Bell, which fell 2 to 108.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,159, compared to 3,375 Friday.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 198.37 million shares.
The NYSE’s composite index fell 0.37 to 165.72.
Indicators Mixed
Standard & Poor’s index of 400 industrials rose 0.12 to 339.64, and S&P;’s 500-stock composite index was down 0.37 to 292.49.
The Wilshire index of 5,000 equities closed at 2,929.589, down 6.543.
At the American Stock Exchange, the market-value index was off 1.15 to 338.08. The NASDAQ composite index for the over-the-counter market closed at 430.93, down 1.06.
Friday’s price declines in the bond market followed a major selloff on Thursday that pushed long-term interest rates to their highest levels in more than a year.
Credit market analysts pointed to growing market sentiment that the dollar had not yet bottomed out against major foreign currencies, increasing chances of higher inflation.
“Anyone who’s tried to speculate in the (bond) market, so-called bottom-fish, for the last couple of weeks has just lost a pile of money almost immediately,” said Stuart Hoffman, senior economist for PNC Financial Corp. in Pittsburgh. “No rally has been sustained for more than a couple of hours.”
In the secondary market for Treasury bonds, prices of short-term governments fell in the range of 6/16 point to 19/32 point, intermediate maturities fell by about 1 1/8 point and 20-year issues fell about 1 1/8 point, according to the investment firm Salomon Bros.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate trading, industrials fell by about 1/2 point and utilities dropped point in light to moderate dealings. Among tax-exempt municipal bonds, general obligations fell 1/2 point and revenue bonds dropped 7/8 point in moderate activity.
Yields on three-month Treasury bills rose 11 basis points to 5.87%. A basis point is one-hundredth of a percentage point. Six-month bills rose 16 basis points to 5.98% and one-year bills rose 22 basis points to 6.17%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.188%, down from Thursday’s 6.25%.
