Dow Dips 6.25 After a Day of Profit Taking : Investors Daunted by Interest Rates, Economy

From Times Wire Services

Wall Street broke a four-day winning streak Tuesday, sliding to a modest loss after profit taking hit the market at a key technical level.

The Dow Jones industrials closed at 2,193.21, a decline of 6.25 points.

Declining issues outnumbered advancing ones by about 4 to 3 in trading of New York Stock Exchange-listed stocks.

The closely watched index of 30 leading shares was up 5.17 points Monday but it failed to close above the key level of 2,200, ending just shy at 2,199.46.


Stocks began the session with a bounce, led by futures-related buying, analysts said. But when the programs turned sellers, the market was knocked off its perch.

Higher short-term interest rates, unremitting strength in the U.S. economy and futures-related selling daunted investors, analysts said.

“It is a bit demoralizing that the market cannot get through that level (2,200),” said market analyst Hugh Johnson of First Albany.

Sluggish Market

Traders said the market seemed to be catching its breath after having advanced in every session of 1989 except the first, setting three post-crash highs in the process.

There was no major economic news affecting the stock market Tuesday, although stocks got continued support from bonds and the dollar.

The dollar rose in spite of reports of continued dollar-selling by the Federal Reserve, which is trying to restrain the currency’s rise. The dollar’s strength helped buoy bonds, which finished slightly higher.

Nevertheless, high interest rates, particularly for short-term instruments, remain an attractive alternative to stocks.


The stock market was somewhat sluggish because it was still trying to digest stocks dumped on it Monday in a big sell program coordinated by Goldman, Sachs & Co., said Philip Puccio, manager of institutional trading at Dillon, Read & Co.

The asset manager rumored to be behind the sale, Renaissance Investment Management Inc. of Cincinnati, declined to comment on its involvement.

“We are variously accused or ascribed as having done things beyond the power of mortal men at times,” said Frank Terrizzi, the firm’s president.

Volume on the floor of the NYSE totaled 140.42 million shares, down from 163.18 million in the previous session.


On the London Stock Exchange, share prices finished slightly higher Tuesday, after an uneven day that saw sharp movements in several speculative stocks. The Financial Times 100-share index ended with a gain of 4.5 points at 1,836.0.