Dow Drops 10 to Close Below the 2,000 Mark : Fears About Economy Bring 4th Straight Drop
Pressured by rising interest rates, the Dow Jones industrial index posted its fourth straight loss Monday, closing below the key 2,000 level.
Analysts said fears of a continued increase in interest rates kept the stock market on the defensive.
The Dow index of 30 industrials dropped 10.11 to 1,997.35, extending its loss during the past four sessions to 61.01 points.
Declining issues outnumbered advances by more than 2 to 1 in New York Stock Exchange trading, with Big Board volume rising to 166.32 million shares from Friday’s 129.08 million.
Tighter Credit Policy
“The market is beset with a lot of fears over interest rates and inflation,” said Monte Gordon, an analyst with Dreyfus Co.
A spate of economic reports showing strong growth has resulted in fears that the economy may be overheating and that the Federal Reserve will have to nudge interest rates higher. On Monday, investors found fresh evidence to fuel their suspicions as the Fed injected fewer reserves into the banking system than had been expected.
Analysts said the Fed’s action appeared to signal that a tighter credit policy is at hand. It comes just one day before the Treasury begins its quarterly refunding debt auction.
“Even if the Fed does nothing, the fear overhangs the market,” Gordon said.
Interest rates were mostly higher in the government securities market Monday. During the next three days, the Treasury will auction $26 billion in new bonds and notes, and uncertainty has been running high about what effect that new supply will have on the credit markets.
Hot Single Issue
A steady flow of higher first-quarter earnings reports had cushioned the market from the widespread pessimism about inflation and interest rates, but investors continue to stay away, brokers said.
The market’s fall Monday was checked by bargain hunters who came in after the Dow hit 2,000, brokers said, but many analysts said the blue chip indicator would continue to retreat in the days ahead.
Nearly one-third of Monday’s total, however, was concentrated in a single issue--Houston Industries, which was unchanged at 30 3/4 on turnover of 48.5 million shares. Analysts cited trading strategies keyed to the electric utility holding company’s impending quarterly dividend.
Murray Ohio Manufacturing jumped 18 to 53 3/4. The company, which makes bicycles and lawn mowers, said its directors rejected a $48-a-share takeover offer from AB Electrolux of Sweden. It also issued a projection of sharply higher earnings this year, in part because of strong mower sales.
Losers among the blue chips included General Motors, down 5/8 at 73 3/4; Procter & Gamble, down 1/2 at 74; Bethlehem Steel, down 3/4 at 18 5/8, and McDonald’s, down 3/8 at 42 3/4.
Japanese stocks ran into some selling after a down day in the Tokyo market. Honda Motor dropped 5 to 141, and Matsushita Electrical fell 5 to 215 3/4.
On the Tokyo Stock Exchange the Nikkei 225-share index fell 223.47 to 27,264.30.
London’s Financial Times 100-share index closed at 1,794.9, down 18.01 from Friday.
