Inflation Fears Send Stocks Lower : Dow Drops 20.23; Trading Volume Is Slowest This Year
Stocks stumbled Monday over inflation fears and lingering post-crash anxiety among large institutional investors, resulting in the slowest trading volume this year.
The Dow Jones average of 30 industrial stocks, which hit the highest level twice last week since the Oct. 19 collapse, dropped sharply at the opening and never recovered, closing at 2,067.14, down 20.23. Broader market indexes also fell.
“The buying interest in the equity market disappeared here today,” said Ronald B. Doran, manager of institutional trading at the First Albany Corp. brokerage. “The institutional investors are doing little of anything.”
Volume on the New York Stock Exchange slipped to 128.83 million shares, slightly more than half the Friday volume of 245.75 million shares and the lowest level since a 111.58-million-share day Dec. 29.
Much of the trading was confined to stocks of companies targeted in rumored or actual acquisitions.
Selling Mood
“Beyond takeover deals, nothing is happening,” said Lawrence Wachtel, a Wall Street analyst at Prudential-Bache Securities Inc. “To a degree, the market is absent of ideas.”
Brokers said falling prices in the bond market contributed to the selling mood by signaling higher inflation and interest rates. This provided many investors with an excuse to cash in stocks that had gained recently.
The reluctance of market participants to commit themselves to stocks for more than a short time reflected an underlying anxiety that has persisted since the October collapse.
“There are very nervous people out there,” said Hank Striefler, vice president on the trading floor at Shearson Lehman Hutton.
Losing issues outnumbered gainers by more than a 2-to-1 margin in composite New York Stock Exchange trading, with 1,042 down, 502 up and 444 unchanged.
Among the most notable blue chip losers, Goodyear fell 1 7/8 to 63 7/8; Du Pont, 1 1/8 to 87 1/2; Woolworth, 1 1/8 to 47; Alcoa, 1 1/8 to 45 5/8, and Philip Morris, 1 1/8 to 93.
Takeover activity boosted several prominent stocks.
Roper gained 2 1/2 to 55 1/2, reflecting a heightened battle for the appliance maker by General Electric and Whirlpool. Koppers jumped 3 3/4 to 57 1/2 after a group led by Beazer PLC sweetened its offer for the construction company to $56 a share from $45.
Kansas City Southern jumped 8 3/4 to 55 after an investor group offered $60 a share for the railroad and financial services concern.
Conflicting news about oil prices reverberated through petroleum stocks, which ended mixed. Kerr McGee fell 1 1/8 to 37 3/8; Chevron droped 1/2 to 46 7/8, and Occidental Petroleum rose 2 to 29.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 150.02 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,574, compared to 4,393 on Friday.
The NYSE index of all listed issues fell 1.18 to 151.47.
Standard & Poor’s index of 400 industrials fell 2.60 to 312.04, and S&P;’s 500-stock composite index fell 2.38 to 268.74.
At the American Stock Exchange, the market value index fell 0.93 to 298.18. The NASDAQ composite index for the over-the-counter market fell 3.01 to 378.57.
The Wilshire index of 5,000 equities closed at 2,661.500, down 20.254.
Overseas, the Financial Times-London Stock Exchange 100-share index fell 14.4 to close at 1,841.1.
On the Tokyo Stock Exchange, the 225-issue Nikkei Stock Average, up 93.97 points Friday, finished today’s morning session down 86.33 points at 25,879.93. The index had dropped 85.85 points in the first 15 minutes of trading.
Today marks the start of the trading week in Tokyo following a national holiday on Monday.
