Market Retreats on Broad Front; Dow Falls 16.58 : Analysts Blame Decline on Computerized Trading
Stock prices fell moderately Tuesday in a broad decline that analysts said stemmed more from computerized program trading than from a widespread selling rush by investors.
The Dow Jones index of 30 industrial stocks, off more than 50 points at one time, closed down 16.58 at 1,928.55.
Broader market indicators also declined but finished above their lows for the day. Decliners outnumbered gainers on the New York Stock Exchange by nearly 2 to 1, with 538 up, 1,001 down and 430 unchanged.
Big Board volume totaled 165.73 million shares, against 158.98 million in the previous session.
Stocks were down sharply most of the session, following early selling by computerized trading programs that set the tone for much of the day. However, analysts said the broad selloff mainly reflected a lack of buying interest and relatively light trading volume, which accentuated the effect of the selling.
Volatile trading on Monday following Friday’s massive selloff kept many participants out of the market for fear of getting caught in another sudden downturn, analysts said.
Trade Deficit Is Key
Also curbing buying interest were worries about program trading linked to stock index futures--cited as a major factor in Friday’s downturn--and uneasiness about the government trade report due out Friday, analysts said.
The trade figures were expected to trigger near-term trends for the dollar and interest rates, both of which have dictated the stock market’s performance in recent weeks. A larger-than-expected deficit could spark another sharp fall in the dollar, which could mean another big selloff in the stock market.
“No one wants to stick their chin out, be a hero, until they see the actual trade figures,” said Charles Jensen, a technical analyst for MKI Securities Corp.
Near the close, the market rebounded on program buying and bargain hunting by investors who deemed stocks underpriced after Friday’s 140-point Dow drop and declines in many issues on Monday.
Oil-related issues finished mostly lower as crude futures declined. Saudi Arabia, the world’s biggest oil exporter, reportedly has been selling crude below the official price set by the Organization of Petroleum Exporting Countries, igniting speculation of a price war.
Technology Issues Drop
Arco fell 2 1/8 to 68 3/4, Amoco dropped 1 1/8 to 68 3/4 and Chevron slipped 5/8 to 40. But Texaco rose 1 to 39 and Exxon gained 5/8 to 39 3/8.
Technology issues, broadly higher on Monday, fell sharply on what analysts said were diminished industry earnings expectations for 1988.
Digital Equipment started the selling in technology issues when brokerage house Morgan Stanley cut its earnings estimates for the company and Kidder Peabody lowered its rating.
Digital Equipment fell 7 7/8 to 124 3/4 in heavy trading; IBM dropped 2 1/2 to 115, Compaq declined 2 to 53 and Unisys lost 1 5/8 to 31 7/8.
Pacific Lighting led the Big Board’s most-active list, falling 5/8 to 49 5/8 on volume of 7.2 million shares.
Among active blue chips, General Electric fell to 44, AT&T; slipped 3/8 to 28 1/8, Navistar was unchanged at 4 1/8 and Eastman Kodak lost 1 3/4 to 48 3/4.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 188.84 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,011, compared to 2,897 on Monday.
The NYSE’s composite index fell 1.07 to 137.74.
Standard & Poor’s index of 400 industrials fell 2.82 to 283.23, and S&P;’s 500-stock composite index was down 2.07 to 245.42.
At the American Stock Exchange, the market-value index fell 3.20 to 262.76. The NASDAQ composite index for the over-the-counter market closed at 331.97, down 4.23.
The Wilshire index of 5,000 equities closed at 2,410.644, down 23.734 from Monday.
On the London Stock Exchange, the Financial Times-100-share index fell 21 points to close at 1,739.2, the day’s low. The index had been up as much as 9.2 points earlier in the day.
