Stock Prices Fall; Dow Down 9.24 : Analysts Blame Interest Rate Worries, Lower Bond Prices
The stock market fell Wednesday, unsettled by increased worries about higher interest rates as well as by sharp declines in the bond market.
The Dow Jones average of 30 industrials dropped 9.24 to 2,134.25, while declining issues outnumbered advances by about 6 to 5 in New York Stock Exchange trading.
Volume on the floor of the Big Board came to 132.35 million shares, against 132.34 million in the previous session.
News that the U.S. merchandise trade deficit narrowed only 3% to $10.35 billion in October from a revised $10.67 billion in September sent stocks lower from the start.
Later, a Federal Reserve report showing a rise in the already rapid pace of activity at American factories reawakened speculation that the central bank would tighten monetary policy, depressing both stock and bond prices.
Brokers said some of the market’s weakness was also caused by program-related selling.
Concern Over Tightened Credit
“There was a little bit of several elements that added up to a sloppy kind of day,” said market analyst Charles Jensen of MKI Securities.
The Fed reported that the nation’s factories and mines operated at an 84.2% rate in November while industrial output rose 0.5%, heightening concerns in the financial markets that the central bank would tighten credit policy to slow the U.S. economy, market analysts said. Most economists consider 85% full capacity for U.S. industry.
Share prices were also plagued by some program selling related to the expiration of stock futures, futures options and stock options on Friday, also known as “Triple Witching.”
Analysts said the market could continue to decline today after breaking through psychological support levels Wednesday.
First Fidelity Bancorp tumbled 8 1/2 to 27. The company said late Tuesday that it will report a loss of $145 million to $190 million for the fourth quarter arising from some problem loans.
Caesars World jumped 4 1/4 to 29 1/2. Donald Trump, the real estate developer and investor, asked for regulatory approval to buy 15% or more of Caesars’s stock, and said he may seek to gain control of the company.
Japanese Stocks Strong
Syntex gained 1/2 to 42 3/4 and Grow Group added 1 5/8 to 11 3/4, both apparently on takeover speculation.
Losers among the blue chips included General Electric, down 7/8 at 45; Coca-Cola, down 1/2 at 44; Eastman Kodak, down 1/4 at 45 1/4, and Philip Morris, down 3/8 at 96 7/8.
Japanese stocks were strong following renewed gains in the Tokyo market. Sony rose 2 3/8 to 57 3/4; Pioneer Electronics gained 2 1/2 to 55 1/2; Honda Motor was up 4 1/2 to 159 1/4, and Matsushita Electric rose 8 to 200.
Galaxy Carpet Mills, traded on the American Stock Exchange, rose 1 3/8 to 13. The company said it had received an unsolicited inquiry about a possible takeover offer.
The Wilshire index of 5,000 equities closed down 8.775 at 2,704.365.
The NYSE’s composite index of all its listed common stocks dropped 0.52 to 154.72.
Standard & Poor’s industrial index fell 1.01 to 317.41, and S&P;’s 500-stock composite index was down 1.00 at 275.31.
The NASDAQ composite index for the over-the-counter market slipped 0.21 to 372.77. At the Amex, the market value index closed at 295.00, down 0.82.
Stock prices closed higher on the Tokyo Stock Exchange on bargain hunting following two days of losses. The Nikkei 225-share index rose 156.92 points to 29,754.73.
Share prices also closed higher in London after a late flurry of activity in the oil sector provided a boost in an otherwise dull trading session. The Financial Times 100-share index rose 3.5 points to close at 1,756.1.
