Dow Declines 8.36 as Cautious Investors Await ‘Triple-Witching Hour’
The stock market finished lower Thursday as profit takers helped to erase about half of the previous day’s advance.
The Dow Jones industrial index fell 8.36 points to 2,092.28. The 30-share index had gained 17.60 points Wednesday as investors cheered a sharp improvement in the U.S. trade deficit for July.
Declining issues outnumbered advances by about 8 to 7 in nationwide trading of New York Stock Exchange-listed issues.
Volume on the Big Board came to 161.20 million shares, down from 177.22 million on Wednesday.
The Commerce Department reported Thursday morning that retail sales declined 0.2% in August, after a downward-revised 0.1% increase in July.
That buttressed recent evidence that economic growth has slowed since midyear, apparently taking some of the pressure off the Federal Reserve to try to restrain the pace of expansion.
The report appears to have been largely ignored as investors focused on other matters.
Stock analysts said the market was weighed down by early profit taking, a modest drop in U.S. bond prices and investor wariness ahead of the triple witching hour, the expiration of stock index futures, stock index options and individual stock options contracts.
“The nature of investors is to be a little nervous,” said Jack Solomon, a stock analyst with Bear, Stearns & Co. “A triple-witching is a little too much.”
“People are trying to tie up loose ends before they take to the sidelines tomorrow,” said Philip Puccio, head equity trader at Dillon Read & Co.
But Solomon said he considered Thursday’s slump “just a temporary hiatus from one to another peak,” and said the market could challenge its post crash high of 2,158.61, set July 5, by the end of September.
Hospital Corp. of America jumped 6 5/8 to 43 3/4 on word that members of its top management proposed a leveraged buyout at about $47 a share.
Other hospital management stocks moved up in sympathy. Humana rose 5/8 to 26 1/2, National Medical Enterprises gained 1 to 21 5/8 and American Medical International up 3/4 to 16 5/8.
Zayre gained 2 to 25 and Ames Department Stores dropped 7/8 to 16 3/8. Ames said it agreed to buy Zayre’s 388-unit discount store division in a deal it valued at about $800 million.
Other major retailing issues showed little effect from the August sales report. Sears Roebuck was down 1/8 at 36 1/2, J. C. Penney dropped 5/8 to 48 1/8 and K mart was unchanged at 36 1/8.
Macmillan Inc. climbed 2 to 86 1/2. Maxwell Communication Corp. raised its bid for the company, which has agreed to a buyout by an investor group for $85 a share.
B. F. Goodrich rose for the second straight session, closing up 1 5/8 at 58 1/8, on takeover speculation. Rumors had circulated Wednesday that Sir James Goldsmith might be a suitor for the chemicals and aerospace products firm.
Stocks of property and casualty insurers rebounded from their declines Wednesday, which were sparked by fears that the industry may be slapped with costly liability claims if Hurricane Gilbert causes widespread damage in the United States.
Aetna Life & Casualty rose 1/2 to 50 3/4, Cigna Corp. gained 1/2 to 52 3/4 and General Re Corp. was up 1/2 to 54 3/4. Analysts said the industry may actually benefit if premium rates go up after the storm.
Many technology issues finished weaker, with International Business Machines Corp. down 7/8 to 113 3/4.
Cray Research Inc., a maker of supercomputers, fell 4 5/8 to 75 1/2 after a computer analyst cut his estimates of the company’s third-quarter earnings.
The Wilshire index of 5,000 equities closed at 2,669.751, down 9.267.
The NYSE’s composite index of all its listed common stocks dropped 0.53 to 151.60.
Standard & Poor’s industrial index fell 1.45 to 307.94, and S&P;'s 500-stock composite index was down 1.18 at 268.13.
The NASDAQ composite index for the over-the-counter market slumped 1.15 to 382.70. At the American Stock Exchange, the market-value index closed at 297.70, down 0.65.
In foreign trading, share prices rose in moderate trading on the London Stock Exchange, as the market awaited some new British inflation figures.
The Financial Times 100-share index edged up 4.2 points to 1,769.3.
The Tokyo Stock Exchange was closed for a national holiday.