Stock Market Closes Fractionally Higher : Dollar’s Slight Recovery Helps Dow Recover From 27-Point Drop
A feeble attempt to rally fell short Thursday but Wall Street stocks were able to erase a heavy drop to close fractionally higher.
Modest buying enthusiasm was tempered by a growing concern about the economy, which caused even good earnings reports to be viewed with skepticism, traders said.
The Dow Jones industrial index closed up 0.17 points at 1,879.31. Volume was a light 158.08 million shares, down from 181.66 Wednesday and gaining stocks led decliners by a slim margin.
It was the smallest change in the Dow index since June 17, when the index was unchanged at 2,407.35.
Analysts said a slight recovery in the dollar in morning trading encouraged traders, who in general thought stock prices had been beaten down lately to levels where they became attractive buys.
Gloomy Felling About Economy
Traders also said there were some arbitrage-related program trades that swung the market in both directions early in the session.
But far more important, analysts said, was a gloomy feeling about the economy that has spread through Wall Street.
“The bullish consensus about the economy has dissolved over the last few days, and that is causing some of the selling,” said market strategist Michael Metz of Oppenheimer & Co.
The most recent economic worries grew out of a jolting report on December housing starts released Wednesday morning. The report showed a 16% drop, the worst housing rate in almost three years.
Investors took that to mean that consumer spending--not just for houses but for a broad range of items--could be on the decline, dimming the prospects for industrial growth in 1988.
And concern persisted on Wall Street over recent quarterly earnings reports by several prominent high-technology companies which, while showing gains, came up short of investors’ expectations.
Stocks of two of those companies were actively traded again Thursday: IBM, up 5/8 at 111, and Motorola, unchanged at 40 7/8.
Brokers say that seems to be a sign of the times in the market--investors responding to news as an opportunity to sell stocks rather than as a reason to buy.
Nevertheless, takeover developments helped some individual stocks post healthy gains.
Sterling Drug rose 2 1/2 to 78 7/8. Hoffmann-La Roche raised its offer for the firm to $81 a share from previous bids of $72 and $76.
Stop & Shop Cos. gained 3 1/8 to 29. Dart Group proposed a friendly $30-a-share takeover of Stop & Shop. The grocery firm said it is reviewing the Dart proposal.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,999, compared to Wednesday’s 3,174.
On the Tokyo Stock Exchange, the 225-share Nikkei average, which posted a 55.03-point loss Wednesday, finished at 22,710.26 points, down 132.88 points. Traders said stock prices were dragged down by the dollar’s declining value on Asian markets.
In London, the Financial Times 100-share index fell 5.6 points to close at 1,747.2. The index had been down nearly 20 points soon after the midday release of disappointing bank lending figures for December.
