Overseas Selloffs, Falling Dollar Pull U.S. Stocks Down : Dow Off 18.24 to 1,945.29; Computer Trading Returns
Stocks again demonstrated a measure of stability Wednesday, declining only modestly in the face of a falling dollar and substantial selloffs in earlier trading on Asian and European exchanges.
The Dow Jones industrial average, which fell nearly 51 points Tuesday after five consecutive gains, gave up another 18.24 and closed at 1,945.29. New York Stock Exchange volume was 202.53 million shares, compared to Tuesday’s 227.84 million shares.
“The market turned in a rather thick-skinned performance, considering what was happening elsewhere in the world,” said Eugene J. Peroni, director of technical research at Janney Montgomery Scott in Philadelphia.
Also exerting a downward tug on the market were continued worries that U.S. officials may not agree on further deficit reduction steps and concerns that the West Germans will not lower interest rates to ease pressure on the dollar.
Wall Street trading did get a boost in the late morning from news that major British banks were lowering their base lending rates one-half percentage point to 9%. But analysts waited for signs that the Germans would follow suit, a move that would be considered more important for U.S. markets.
Declining shares outnumbered advancing stocks by 922 to 709 on the New York Stock Exchange. Broader indexes followed the lead of the Dow, with the Standard & Poor’s 500-stock index declining 1.86 to 248.96 and the NYSE composite index losing 1.00, ending at 139.11.
Effective Wednesday, the New York Stock Exchange had withdrawn its request that member firms refrain from using the controversial, computer-based program trading techniques in trading for their own accounts. Traders said program trading was in evidence during the day’s session, and some claimed that it helped buoy the market during its weaker moments.
Stocks Off in Europe
But Peroni predicted that the computer-triggered trading would be used sparingly in the coming weeks, because several investment firms found it ineffective in coping with the market’s collapse. “They’ve been burned, and they’re going to be wary,” he said.
The market fell more than 35 points in the first 15 minutes of trading, a slide that some analysts called a reaction to falling prices in other markets around the world. In Tokyo on Wednesday, the Nikkei 225-share index closed down 298.07, or 1.3%, to 23,060.33. In trading this morning, the Nikkei index fell 484.15 points to close the morning session at 22,576.38 points.
In London trading, the Financial Times index of 100 leading stocks was off 45.8 points to 1,608.10. Stocks retreated on the five other European exchanges as well.
In U.S. trading, Texaco fell 3/4 to 30 as the company came under increased pressure from creditors to settle with Pennzoil. Pennzoil gained 5 1/8 and closed at 70 5/8.
A. H. Robins advanced 1 1/2 to 21 on news that the pharmaceutical firm had signed a definitive agreement to be acquired by Rorer Group for $2.6 billion. Rorer was down 3/8 at 35 3/4.
CBS Inc. soared 6 1/8 to 171 1/2 after a Dow Jones News Service report quoting a CBS official as saying that there was a 70% chance that CBS’ record operations would be sold for $2 billion to Sony Corp., perhaps as soon as this weekend. Sony edged up 3/8 to 28 1/8.
