Dow Slips 11.32; Stocks Drop in Profit Taking
The stock market fell in active trading Wednesday, as many investors continued selling shares to cash in profits from the 11-session rally that ended Tuesday.
The Dow Jones index of 30 industrials fell 11.32 to 2,428.41.
Declining issues outpaced gainers by about 3 to 2 on the New York Stock Exchange.
Big Board volume totaled 153.76 million shares, down from Tuesday’s 194.20 million.
“The market is sort of digesting the move it’s made over the last couple of weeks,” said William Tiritilli, vice president for research at Rodman & Renshaw, a brokerage firm in Chicago. “There’s still a lot of skittishness out there as to what’s going to happen.”
Stock prices also were dampened for a second day by a weaker dollar and declining bond prices, analysts said. The resilience of the dollar and the resulting strength in bond prices had been buttressing stocks in recent sessions.
The dollar dropped against all major foreign currencies Wednesday, sending bond prices lower and interest rates higher on speculation that more expensive imports could rekindle inflation.
After an initial decline, the stock market advanced in early trading, but it turned mixed around midday and remained on the downside for the rest of the session.
Stock prices were supported somewhat by a jump in IBM’s price, analysts said. IBM rose 1 to 166 1/8, boosted by the company’s statements that the computer giant expects record sales of its personal computers this year.
Dayton Hudson fell 2 1/8 to 51. On Tuesday, a Cincinnati portfolio manager made a purported $70-a-share buyout offer for the retailing company that was later discredited.
Meanwhile, bond prices fell again as traders continued to track movements of the dollar on foreign exchange markets.
The Treasury’s bellwether 30-year issue fell 11/32 point, or nearly $3.75 for each $1,000 face amount, after falling 3/16 point on Tuesday. Its yield rose to 8.44% from 8.42% the previous session.
Corporate and municipal issues were also lower.
In the Treasury’s auction of four-year notes, the average yield was 7.89%, up from 6.79% at the last auction in March. The notes will carry a coupon interest rate of 7.875%, with each $10,000 in face value selling for $9,994.90.
A total of $7.55 billion in notes was sold out of bids totaling $25.34 billion.
In the secondary market for Treasury bonds, prices of short-term issues fell 7/32 point, intermediate bonds ranged 7/32 point to 5/16 point lower while 20-year issues were down just over 3/8 point.
In corporate trading, industrials and utilities declined 1/8 point.
Among tax-exempt municipal bonds, general obligations fell 1 point and revenue bonds dropped 5/8 point.
The federal funds rate, the interest on overnight loans between banks, traded at 6.675%, up from 6.188% on Tuesday.
