Takeover Rumors Create Nervousness : Market Indexes Close Mixed; Dow Slips 7.79
The stock market closed mixed Thursday in confused trading dominated by profit taking in the blue chip sector but strong demand for airline and takeover issues.
The Dow Jones industrial average dropped 7.79 to 2,063.49. But broader indicators closed higher. The American Stock Exchange market-value index closed at 292.51, up 1.59., while the NASDAQ over-the-counter index gained 1.63 to 372.01.
Advancing issues outnumbered declines by about 9 to 8 on the New York Stock Exchange.
Big Board volume totaled 203.31 million shares, up from Wednesday’s 199.63 million. The NYSE’s composite index edged up 0.02 at 150.70.
Poor retail sales for February awakened some investors to uncertainties still besetting the economy. It encouraged them to take profits from the rally last month that propelled stocks to their best level since the October crash.
“Conventional investors have retreated to the sidelines, leaving the arena largely to the high-powered speculative players that want to be where the action is,” said Michael Metz of Oppenheimer & Co.
But the intense level of takeover activity kept an uneasy cushion under trading. Airline stocks also gained, benefiting from cheaper oil, strong traffic and increased ticket prices.
Reminiscent of Summer
The Dow Jones transportation index surged 11.57 to 849.94, mostly on airlines’ strong performance.
Rumors, however, were the dominant factor, causing concern among some market watchers, Metz said. “It (the high level of takeover speculation) is reminiscent of last summer, and it is making some people nervous.”
Koppers Co., rumored for more than a week to be the target of a British takeover, received an offer from Beazer PLC, a large British construction concern. Koppers rose above the $45 offer price to 51 3/4, up 6 5/8, prompting speculation of a higher bid or restructuring.
Hildegard Zagorski, a Prudential-Bache Securities analyst, said the high volume of speculation in takeovers made the market frothy “and is beginning to turn some people off.”
Analysts attributed a 2 3/4 jump to 32 in Texas Eastern’s stock to a renewal of takeover rumors. Coastal Corp. and several others were mentioned as possible buyers.
Texaco rose 1 to 45 on the prospects of a radical restructuring or takeover of the company. Airline stocks were broadly higher, aided by signs of easing fare competition. Delta Air Lines gained 7/8 to 48 7/8; AMR rose 2 1/8 to 42 1/8; NWA added 1 1/8 to 44 3/4, and Allegis rose 1 to 77.
Blue Chip Losers
Sears Roebuck, which reported a 2.5% gain in retail sales for February, dropped 1 to 38 3/4. Other losers among the blue chips included International Business Machines, down 3/4 at 116 1/2, Philip Morris, down 2 1/8 at 93 and General Electric, down 3/8 at 44 3/4.
The Wilshire index of 5,000 equities closed at 2,644.792, up 2.473 from the preceding trading day.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 233.42 million shares.
Standard & Poor’s index of 400 industrials dropped 0.26 to 309.34, and S&P;’s 500-stock composite index was down 0.10 at 267.88.
In London, the Financial Times 100-share index closed off the day’s high to finish up 4.6 at 1,813.3.
Brokers in Tokyo said they feared that a string of strong trading sessions that have sent the Nikkei index up over 2,000 points since Feb. 10 had been overdone, and set the scene for Thursday’s selloff.
The Nikkei 225-share index fell 86.51 to 25,596.31, a decline of 0.34%. On Wednesday, the index gained 246.92 points.
