Pessimistic traders and short-sellers had their wish...

Pessimistic traders and short-sellers had their wish come true as the Dow Jones Industrial Average fell 78 points, or 3.3%, over the past two trading days, Irving Katz, director of research at Thomas Green/San Diego Securities, said Monday.

The drop followed the announcement that the producer price index had increased 1% in February or 12.6% on an annual basis, portending a distinct inflationary environment in the near future.

Interest-sensitive stocks were particularly affected as HomeFed Corp., parent of Home Federal Savings, was down $1.50 and Great American First Savings Bank fell $.875. Home Federal had reached a new 52-week high of $33.375 earlier in the week.

Other stocks selling off were Henley Group, down $4; Rohr Industries, down $2.50; Xytronyx, down $1.25; and Magma Power and Mail Boxes Etc., each down $1. New lows were recorded during the past week by Synbiotics and Syntro, a pair of local biotechnology companies.

The largest gainer of the week was Pancretec, which hit a new high of $14.50 in response to a bid by Abbott Laboratories to acquire the company for $15 a share, or $54 million. The stock, which sold at $1.50 in December, 1987, was selling at $9.625 just two weeks ago.

“It would appear that some (Pancretec) investors were very prescient about the company’s future,” Katz said, referring to the more than 40% run-up in Pancretec’s stock price over the past two weeks.

Other stocks, including Humphrey, Molecular Biosystems, DH Technology, and General Microelectronics reached 52-week highs last week but were unable to sustain them when the market dropped.