Dow Dips 6.6 as Technology Issues Sink
Stock prices pulled back in moderate trading Tuesday on renewed concerns that the economy may be slowing.
The market meandered in a narrow range in early trading before turning lower in the afternoon, partly weighed down by weakness in technology stocks.
The Dow Jones index of 30 industrials fell 6.60 to 2,298.20.
Declining issues outnumbered advancing ones by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board came to 160.68 million shares, down from 164.66 million in the previous session.
“People are beginning to be concerned about a slowdown in the economy. Taken one step further, a slowdown could mean lower corporate profits,” said Thomas Gallagher, head of block trading for Oppenheimer & Co.
Computer Issues Sag
“The few areas of strength in the market were defensive stocks, like foods and tobaccos. The market already is starting to discount a slowdown,” said market analyst Alfred Goldman of A. G. Edwards & Sons.
Investor concern about a downturn showed up most glaringly in technology and auto shares. News that Tandem Computers Inc. expects second-quarter revenue nearly 5% below Wall Street estimates raised fears that a slower economy may lead to softer corporate profits, traders said.
The worries depressed the entire technology sector, which has been hurt recently by a spate of company announcements portending lower-than-expected first-quarter results.
Tandem shares fell 2 1/8 to 14 7/8. International Business Machine Corp. shares fell 1 1/2 to 107, Digital Equipment Corp. lost 1 5/8 to 96 1/4 and Cray Research Inc. shares dropped 7/8 to 53 3/4.
A continuing decline in the dollar against other foreign currencies depressed stocks.
‘Holding Pattern’
Hugh Johnson, senior vice president at First Albany Corp., said stocks and bonds had benefited from the dollar’s recent strength on the theory that a higher dollar would bolster the confidence of foreign investors and attract capital from overseas into U.S. financial markets.
Another negative influence on stocks was the announcement by several companies involved in takeovers that they were taking defensive measures.
“The market seems to be in somewhat of a holding pattern,” said Jack Barbanel, a senior vice president at Gruntal & Co., adding that Wall Street may remain subdued this week, awaiting Friday’s release of U.S. employment statistics.
The Labor Department’s employment report for March will furnish a fresh indication of how much the economy is responding to the Federal Reserve’s efforts to slow growth and diffuse inflationary pressures.
SmithKline Beckman led the NYSE active list for much of the session and finished up 1/4 at 65 7/8. The stock was a strong performer Monday amid speculation that a rival bid may emerge for the drug company following its disclosure that it is planning to merge some of its major operations with Britain’s Beecham.
Tokyo stock prices rallied to a fifth straight record close Tuesday, helped by the strengthening of the Japanese yen and lower oil prices. The 225-share Nikkei index jumped 270.18 points to end at another record high of 33,312.25.
In London, stocks ended a moderately active session off their highs after Wall Street opened lower. The Financial Times 100-share index finished 3.2 points lower at 2,082.8.
