Dow Falls 8.18 After Report of Weaker GNP : Dollar, Bonds Offer Markets No Inspiration
The stock market retreated Wednesday, unable to reverse early losses sparked by a government report that showed a slowing in the economy in the third-quarter.
The Dow Jones index of 30 industrials dropped 8.18 to 2,165.18, on Big Board volume of 181.55 million shares, up from Tuesday’s 155.19 million. Declining issues outnumbered advances by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks.
The government estimated that the gross national product grew at a 2.2% annual rate in the third quarter, down from 3.0% in the second quarter and well below expectations. It marked the slowest pace since the end of 1986.
Traders said the market lacked the will to move higher in the face of a weaker dollar and lackluster bond prices. The takeover sector, highly active in recent sessions, continued to capture the most attention, they said.
“I think we will stay in this range until we see some improvement in the breadth figures,” said technical research director Robert Simpkins of Delafield, Harvey Tabell Inc.
Bond Prices Rise
Muriel Siebert, president of Muriel Siebert & Co., said many of her retail customers were reacting to the takeover fever by taking profits. “We’ve had lots of individuals selling these stocks because they’ve just made tremendous profits.”
The dollar weakened after the report was issued and so, after a brief period of hesitation, did stock prices as well.
Bond prices, however, rose after the GNP report was released.
The Treasury’s closely watched 30-year bond advanced 3/16 point, or about $1.80 per $1,000 face amount. Its yield, which often indicates interest rate trends, fell to 8.90% from 8.93% late Tuesday.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.25%, unchanged from late Tuesday.
Losers among the blue chips included International Business Machines, down 1 at 121 5/8; McDonald’s, down 5/8 at 47 1/2; Eastman Kodak, down at 48 5/8; Coca-Cola, down 3/4 at 43 3/4, and American Telephone & Telegraph, down at 27 3/8.
In foreign trading, shares ended higher on the Tokyo Stock Exchange in the biggest day’s turnover since mid-July as investors became more confident, brokers said. The Nikkei 225-share index rose 199.11 to 27,620.60
Stock prices closed slightly higher in light trading on the London stock exchange as investors stepped to the sidelines to await today’s British balance of payments report. The Financial Times 100-stock index closed up 2.9 at 1,850.7.
