Speculative Selling, Interest Rate Concerns Send Dow Index Down 13.09
Wall Street stocks fell again on Friday as a bearish wave of selling reflecting the market’s lingering worries about the economy wiped out early gains.
The Dow Jones industrial average finished down 13.09 points at 1,910.48. For the week, the blue chip indicator lost 47.74 points.
Advancing issues slightly outnumbered declines among New York Stock Exchange-listed issues, with 782 up, 737 down and 456 unchanged.
Big Board volume came to 161.31 million shares, down from 186.49 million in the previous session.
“The market was up for most of the session, but it lost its grip near the close,” said Eugene Peroni Jr., an analyst with Janney Montgomery Scott in Philadelphia.
Analysts said speculative selling, a drop in the Dow below a “support level” at 1,920 points and uncertainty about the direction of interest rates contributed to the decline.
The stock market has been bearish all week as investors remain unconvinced that easier interest rates will offset the pain of a sluggish economy.
The bond market staged a strong advance in response to the Labor Department’s report of a smaller than expected increase of 107,000 in non-farm payroll employment for January.
The benchmark 30-year Treasury bond’s yield fell to 8.30% from 8.45% at Thursday’s close.
“The market is not receptive to anything but extraordinarily good news,” said Peroni. The late selloff exposed the market’s “paranoid shell,” he added.
The relatively small employment increase was taken as a signal that the economy started out 1988 on a subdued note, suggesting that the Federal Reserve might find room to ease its credit policy.
The stock market’s reaction to the news was far less enthusiastic. Some analysts said traders remain concerned that a sluggish economy will mean lower corporate profits and possibly a recession.
Others noted that stocks seem to have been shrugging off most “favorable” news lately, suffering from a bear market atmosphere and an accompanying lack of buyers.
Though it is a week away, some analysts said investors had begun to look ahead cautiously to next Friday’s scheduled report on the nation’s trade deficit for December.
An unexpectedly large decline in the trade gap for November helped the dollar to stabilize in recent weeks. But brokers said the confidence that news engendered was fragile.
Auto stocks were a notable weak spot in Friday’s trading. Chrysler, which said it would incur large start-up costs for new models in the current quarter, dropped 1 7/8 to 24 1/8; General Motors fell 1 1/8 to 63 1/8, and Ford Motor declined 1 3/8 to 40 7/8.
Elsewhere among the blue chips, International Business Machines lost 5/8 to 108; American Telephone & Telegraph fell 1 1/8 to 28 3/4; General Electric dropped 1 to 42 1/2; Eastman Kodak eased 3/8 to 40 5/8, and Coca-Cola dipped 7/8 to 35 1/2.
Federated Department Stores rose 3/8 to 56 5/8. The company rejected the takeover advances of Toronto-based Campeau Corp., heightening speculation that another bidder might appear.
The NYSE’s composite index of all its listed common stocks dipped 0.54 to 141.35.
In foreign trading, share prices in London declined Friday. The Financial Times 100-share index closed down 29.1 points at 1,737.8.
In Tokyo, the Nikkei 225-share index fell 58.30 points, or 0.25%, to 23,650.80. The index rose 113.73 points Thursday.
