Program Trading Nips Rally; Dow Drops 4.11
The stock market snapped a three-session winning streak Tuesday after blue chips failed to sustain a brief flirtation above the 2,300 level and a late burst of program selling eroded earlier gains. The Dow Jones index of 30 blue chips, up 20.53 points on Monday, slipped 4.11 to 2,290.71.
Declining issues slightly outnumbered advances in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board came to 172.50 million shares, up from 168.88 million in the previous session.
“We just had a couple of sell programs,” said Abbe Cocuzza, strategist in stock index futures at Shearson Lehman Hutton Inc., adding that disappointment emerged when blue chips could not hold the line above 2,300.
“Like all round numbers, 2,300 seems to have a psychological effect,” said Gene Jay Seagle, technical research director at Gruntal & Co.
Unemployment Report Awaited
Trading was tentative as investors were sidelined before Friday’s report on February unemployment--which will indicate whether the U.S. economy is still booming and interest rate hikes are needed to ward off inflation. Higher rates depress stocks by raising corporate borrowing costs and luring investors to interest-bearing assets.
“We’re still very sensitive to reports which may indicate (growing) inflation,” said A. C. Moore, Argus Research director of research.
Wall Street estimates call for the unemployment report to show an increase of about 250,000 in non-farm payroll employment.
Stocks drew little strength from the bond market, which had propelled the Dow to its 20.53-point gain Monday.
Stocks also softened after the rising U.S. dollar turned mixed in the afternoon.
Oil service stocks, which have benefited from recent strength in oil prices, were broadly higher. Schlumberger gained 3/4 to 38 5/8, Halliburton 1 1/8 to 31 3/4, Dresser Industries 5/8 to 38 and Baker Hughes 1/2 to 17 1/4.
In the oil sector, Amoco was up 1 to 81, Mobil rose 1/4 to 49 1/2, Atlantic Richfield climbed 1 1/4 at 91 1/8 and Chevron was up 3/8 at 52 1/4. All made new 52-week highs.
Microsoft tumbled 8 1/2 to 53 1/2 as the most active issue in the over-the-counter market. The company said it expects to report lower earnings for its fiscal third quarter ending March 31.
Investors on the Tokyo Stock Exchange on Tuesday brushed aside concerns over the Japanese yen’s sharp decline against the U.S. dollar and the arrest of one of Japan’s most powerful businessmen in connection with the country’s widening financial scandal to send prices moderately higher after a two-day retreat. The Nikkei 225-share index gained 61.08 to close at 31,937.94.
Share prices also closed higher on the London Stock Exchange, helped by the British pound’s strength against the West German mark. The Financial Times 100-share index closed up 10.7 at 2,083.5, marking the sixth rise in a row.
