Midday Market Rally Falls Apart in Late Trading : Toyko Stocks Plummet More Than 1,000 Points in Early Trading Today
The stock market took another tumble on Tuesday, erasing a midday rally in blue chip issues that analysts traced to President Reagan’s comments that he doesn’t want further declines in the dollar.
Analysts said the market is quite sensitive to the possibility that declines in the dollar may drive foreign investors out of U.S. stocks and is dissatisfied with efforts to reduce the federal budget deficit.
In New York, the Dow Jones average of 30 industrials, which fell 58.85 on Monday, lost another 22.05 points to close at 1,878.15 on Tuesday.
The widely watched market gauge, which reflects price movements in 30 blue chip issues, had been down 44 points at mid-morning, but pushed a few points ahead of Monday’s closing level shortly before 2 p.m. EST on Wall Street. It fell steadily in the final 90 minutes of trading in another abbreviated session that ended at 3:30 p.m. EST.
In Tokyo today, the Nikkei stock average indicator dropped more than 1,000 points in early afternoon trading, while the dollar steadied in foreign exchange dealings.
Traders said the stock market, depressed by the collapse of stock prices in the United States, was still probing for a bottom.
Alan Yamashita of Goldman Sachs in Japan said the 225-issue Nikkei average was down 1,004 points to 20,682 about 30 minutes after the market opened for its afternoon session.
On Tuesday, the Nikkei average suffered its fifth-largest single-day decline, falling 731.91 points to finish at 21,686.46 points.
Rod Birkett of the equity sales division of Vickers da Costa said the Nikkei average was now below levels set during October’s violent market swings. After the market crash here on Oct. 20, the average dropped to 21,615 on Oct. 26.
The dollar opened at 134.80 yen, up from Tuesday’s close of 133.65 yen, a record low since the modern exchange rate system was set up in the late 1940s.
On the New York Stock Exchange Tuesday declining issues outnumbered gainers by 3 to 1 in the overall tally of NYSE-listed issues, with 416 up, 1,277 down and 305 unchanged.
Volume on the Big Board came to 184.31 million shares, compared to 160.69 million shares on Monday. It was only the third time in the past four weeks that trading volume was below 200 million shares.
The market opened lower in what some analysts said was a carryover from sharp declines overnight on foreign stock exchanges and traded erratically at lower levels all morning.
European stocks were in retreat for most of the day as well. The London blue chip barometer, the Financial Times 100-share index, fell 50 points in early business to its lowest since August, 1986. However, the London market then rallied sharply and by early afternoon had wiped out its losses and closed up 8.3 at 1,573.5.
In West Germany, Frankfurt’s leading stock index fell a near-record 7.3%.
The dollar closed at a postwar low in Tokyo and was falling elsewhere at midday when President Reagan mentioned the dollar in an off-the-cuff remark to reporters.
“We’re not doing anything to bring it down,” Reagan said. “I don’t look for a further decline, don’t want a further decline from where it is right now.”
The dollar rebounded on word of Reagan’s comments, and blue chip stock prices recovered from the day’s lows, pushing the Dow Jones industrial average above Monday’s closing level by early afternoon. But the rally faded.
Analysts said Reagan’s comments probably did not signal a shift in policy, and his new commerce secretary, C. William Verity, told the National Press Club that the markets should set the proper level for the dollar.
Retail Stocks Lower
Investors remain quite nervous following the historic price collapse Oct. 19 that sent the Dow Jones industrial average down 508 points, said Hugh Johnson, chief investment officer at the regional brokerage First Albany Corp. in Albany, N.Y.
“There is still a feeling that we could get blind-sided in the next half-hour,” he said. “The confidence in the markets is not very high.”
Market watchers said a strike begun Tuesday by clerical workers against NYSE appeared to have little effect on trading activity.
Among the most actively traded issues, General Electric fell 7/8 to 43 3/8; American Telephone & Telegraph was down 1/8 at 28 1/2; International Business Machines Corp. was off 3/8 at 117 3/4, and American Express fell 1 1/2 to 22 1/2.
Retail stocks were lower as some analysts have expressed a somber outlook for Christmas shopping. Sears fell 1 to 34; J. C. Penney was down 1 1/8 at 42, and K mart was down 1 at 27 3/4.
The automobile stocks also fell, with General Motors off 5/8 at 57 3/8; Ford down 1 5/8 at 71 3/4, and Chrysler off 1 3/8 at 23.
Shares in takeover targets were buffeted as analysts worried about firms’ abilities to finance deals.
Southland Corp., whose stock was halted in the afternoon because of an imbalance between buy and sell orders, fell 16 to 51 1/2 later in over-the-counter trading. Southland said its underwriters would not proceed with the sale of $1.5 billion of debt that was to have been used to finance the acquisition of Southland by the retail and oil company’s founding family.
Singer fell 1 3/8 to 48 1/8, even though T. Boone Pickens Jr. on Monday raised his stake in the defense company, also the target of an unsolicited $50-a-share offer from investor Paul A. Bilzerian.
Telex Corp., which is being pursued by New York investor Asher B. Edelman, fell 3 5/8 to 51.
Banks and government agencies will be closed today in observance of Veterans Day. Stock and commodity markets will remain open. The Business section will publish as usual.
Dollar Rebounds, Part I, Page 1
