Market Trims Early Losses; Dow Dips 7.65 : Salomon Bros. Report Pressures Stock Prices
The stock market closed lower Monday but recovered much of its early loss as higher bond prices and lower oil prices helped firm the market in late trading.
The Dow Jones index of 30 industrials dropped 7.65 to 2,105.26.
Declining issues outnumbered advances by about 9 to 5 in nationwide trading of New York Stock Exchange-listed issues. Big Board volume fell to 130.38 million shares from Friday’s 175.75 million.
Earlier in the day, the Dow index fell to 2,086, pressured partly by reports that Salomon Bros., a leading securities firm, was advising clients to sharply reduce their short-term stock holdings.
Salomon said it had made a recommendation on stock holdings but refused to give details. Analysts and traders at other companies said Salomon was recommending that investors hold no more than 17% in stocks, down from 40% in their previous recommendations.
“This doesn’t mean we think stocks are going to tank (drop suddenly). We just think now is not the best time to buy,” a source at Salomon later said.
Traders noted that NYSE trading volume was fairly light, making the market more susceptible to sharp movements.
Signs of Skittishness
Traders cited firmer bond prices and lower crude oil prices as contributing to the afternoon recovery. The benchmark U.S crude, West Texas Intermediate for November delivery, fell 31 cents to close at $13.06 a barrel. The bellwether 30-year Treasury bond gained a quarter-point in late New York trading to 101-22/32, depressing its yield to 8.96% from 8.98% at Friday’s close.
Market analysts stressed the absence of many players in the market Monday and said they discerned skittishness as the Oct. 19 crash anniversary approaches.
“The market’s almost devoid of a broad number of investors--it seems to be largely made up of rumors, observers of economic numbers, and buy and sell programs,” said Gene Jay Seagle, technical research director at Gruntal & Co.
“This is the October willies,” said one trader.
Market analysts said investors appear to be riveted on the September unemployment report due Friday, which will give the first indication of the economy’s performance in September.
Losers among the blue chips included Exxon, down 3/8 at 44 3/8; International Business Machines, down 1/2 at 114 7/8; General Electric, down 1/8 at 43, and Coca-Cola, down 5/8 at 43 1/8.
In the plus column, Ford Motor gained 3/4 to 51 7/8 and Eastman Kodak rose 7/8 to 45 7/8.
Technology issues were broadly lower. Digital Equipment fell 1 to 92 7/8, and Hewlett-Packard dipped 1/8 to 49 3/4. In the over-the-counter market, Intel lost 1 1/8 to 26 3/8 and Apple Computer fell 3/4 to 42 1/2.
Japanese Issues Slump
Home Office Reference Laboratories Inc. fell 4 to 10 3/4 as investors reacted to news late Friday that the company expects significantly lower third-quarter earnings. R. P. Scherer gained to 28 3/4. The maker of gelatin capsules said Friday that it would consider a sale of itself.
In foreign trading, stocks continued to slide in dull trading on the Tokyo Stock Exchange on Monday. Most investors stayed on the sidelines, discouraged by Emperor Hirohito’s illness. The Nikkei 225-share index, which fell 223.54 in half-day trading Saturday, shed 154.60 to close at 27,545.53.
Share prices on the London Stock Exchange also fell sharply to close at the day’s lowest point, as a negative start to Wall Street and concerns over slumping oil prices depressed a thin market. The Financial Times 100-share index ended 23.9 points lower at 1,802.6.
