Stocks Close Lower; Dow Drops 4.98
The stock market closed lower Wednesday, but bulls were heartened that blue chip issues managed to hold the psychologically important 2,000 mark of the Dow Jones average.
It was nip-and-tuck in the final minutes of trading as the 30-share industrial index danced around 2,000 to finally close at 2,000.99, down 4.98 points. The index rose above 2,000 on Tuesday for the first time in nearly six weeks.
Declining issues barely led advancing ones, 763 to 743. New York Stock Exchange volume was estimated at 177 million shares, higher than the 135 million shares that changed hands on Tuesday.
“The technicians are saying that the market looks pretty good--all we need is a little better volume,” one trader said. “But from a fundamental point of view, the jury is still out.”
Since Black Monday, the market has been above 2,000 five times including Tuesday but has failed to remain there for more than four days at a stretch.
Acknowledging that the mood about the economy is much more optimistic than it had been just a few weeks ago, analysts said investors are still unsure about the role that interest rates will play.
The market was buffetted by two forces. In addition to the technical picture that focused on the actual level of the Dow, investors also had to figure out the ramifications of a disappointing 1.9% decline in January U.S. housing starts.
The figure contrasted with other recent economic data, such as U.S. trade data, retail sales and wholesale prices, which suggested that the economy was not as weak as many had feared since the October crash.
In January, when the Commerce Department said that December housing starts fell 16.2%, the market reacted sharply: The Dow fell 57 points.
Expects Higher Market
Now, said Byron Wein, a market strategist with Morgan Stanley & Co., “We might be coming close to a recession, but we are not falling into one.” Slow growth and lower interest rates make the market a favorable investment, he said.
The day’s “meandering,” Wein said, was in part a natural reaction to the market’s recent sharp increase. Last week the market rose 73 points.
Wein said he expects the market to move higher, reaching 2,200 on the Dow Jones industrial average by the end of June. “The next move up is dependent on lower rates,” he said.
Among actively traded blue chips, Eastman Kodak lost 1/2 to 42 1/2; Philip Morris fell 1 1/2 to 89 1/8; International Business Machines dropped 1 to 112 3/4, and American Telephone & Telegraph dipped 1/8 to 29. An exception was Ford Motor, up 1/2 at 44 1/2.
Firestone Tire & Rubber dropped 3 to 42 after jumping 9 points on Tuesday, when the company agreed to form a joint venture with Bridgestone Corp. of Japan that would take over Firestone’s tire business.
Cooper Tire climbed 2 1/8 to 34 5/8.
Pillsbury fell 2 5/8 to 31 7/8. The company said analysts’ estimates of its earnings for the fiscal year ending in May were too high.
Navistar International led the active list, up 1/8 at 4 1/2. The company reported sharply higher quarterly earnings from continuing operations.
Allegis Higher
Lomas & Nettleton Financial fell 1 1/8 to 16 5/8. The company said it would take a charge of about $93 million in the current quarter in connection with moves to cease its home building operations and restructure its mortgage banking division.
Allegis rose 7/8 to 72. The company said it began its tender offer for as many as 35.5 million of its common shares for $80 apiece.
The Wilshire index of 5,000 equities closed at 2,555.915, down 1.582 from the preceding trading day.
The NYSE’s composite index of all its listed common stocks dipped 0.24 to 145.72.
Nationwide turnover in NYSE-listed issues including trades in those stocks on regional exchanges and in the over-the-counter market totaled 202.43 million shares.
Standard & Poor’s index of 400 industrials fell 0.50 to 298.59, and S&P;’s 500-stock composite index was down 0.62 at 259.21.
The NASDAQ composite index for the over-the-counter market rose 0.54 to 355.28. At the American Stock Exchange, the market value index closed at 279.09, up 0.16.
In foreign trading, prices closed higher in moderately light trading on the London Stock Exchange Wednesday. The Financial Times 100-stock index ended 13.5 points higher at 1,748.1.
Dealers said share prices rose as investors took a second look at Tuesday’s figures for Britain’s public sector borrowing requirement, which is a measure of its budget deficit, and industrial production. The reports were better than market expectations but had failed to boost share prices on Tuesday.
Tokyo stock prices spurted in late trading on Wednesday thanks to optimism over the dollar’s strength and an overnight rally on Wall Street, brokers said.
The Nikkei 225-share index climbed 84.29 points to close at 24,429.95, after dropping slightly at one point.
