Dow Falls 15.77; Stocks Drop in Profit Taking
Stock prices slumped Tuesday as traders pulled profits from an unenthusiastic market and oil and technology company earnings declined.
The Dow Jones index of 30 industrials fell 15.77 points to 2,386.91, the second straight decline after a four-week rise that pushed the market to post-crash highs.
Declining issues outnumbered advances by about 8 to 7 in nationwide trading of New York Stock Exchange-listed stocks, with 687 up, 827 down and 471 unchanged.
Volume on the floor of the Big Board totaled 165.43 million shares, up from 142.10 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 196.49 million shares.
Analysts cited a tepid environment with traders lacking conviction in the recently rising market. They said the gains were achieved in fits and starts, not in a solid atmosphere, and the selloffs this week reflected that weakness.
“It’s like being a 100-yard dash runner in a marathon,” said Dennis E. Jarrett, a technical analyst with Kidder, Peabody & Co. “You last a little bit then you have to rest.”
Analysts said many investors felt it was time to sell into the market, considering the Dow’s rise of more than 150 points in the last month and uncertainty on the economy and interest rates.
Wall Street opened with a first-hour flurry after a government report that showed durable goods orders rising 0.8% in March and a resilient Tokyo market that leaped despite Prime Minister Noboru Takeshita’s resignation announcement.
But confidence soon sagged, analysts said, and steady selling occurred as it did Monday, when the Dow index lost 6.78 points but remained above 2,400.
Tuesday’s weakness was greatest in oil, technology and airline stocks.
Among the most active issues, Citizens & Southern plunged 4 5/8 to 29 3/8 as 2.5 million shares changed hands. The decline followed NCNB’s withdrawal of its buyout offer for the Atlanta bank.
Cray Research plummeted 6 1/8 to 49. The world’s biggest supercomputer maker reported a 94% drop in first-quarter profit and forecast significantly lower second-quarter earnings as well.
The announcement spurred fluctuations in other technology stocks. Hewlett-Packard lost 1 1/8 to 55 7/8, Digital Equipment dipped 7/8 to 95 7/8 and Control Data fell 1 to 19 1/2.
Oil stocks were lower across the board on industrywide earnings well below expectations. Chevron was the biggest loser, dropping 1 5/8 to 54, after reporting a 52% earnings slide.
Disappointing auto sales figures also pushed car makers’ stocks lower, with General Motors off 1 1/4 to 41 5/8 on a sales decline from a year ago. Chrysler, which also reported a decline, was down 1/8 at 24. Ford Motor gained 3/8 to 48 3/4 after reporting a slight sales increase.
In Tokyo, share prices surged on news Prime Minister Noboru Takeshita and his Cabinet would resign because of the Recruit stock scandal, brokers said.
The key 225-share Nikkei index surged 438.86 points to finish at 33,244.78, marking its biggest one-day gain since a 793.96-point rise March 28.
In London, shares ended higher but trading was cautious ahead of the release of Britain’s March trade statistics today. The Financial Times 100-share index closed 9.2 points higher at 2,071.2.
Credit
Bond prices advanced as evidence mounted that the economy is slowing.
The Treasury’s benchmark 30-year bond rose 5/16 point, or nearly $3 per $1,000 face amount. Its yield, which moves inversely to its price, fell to 8.95% from 8.98% late Monday.
In the secondary market for Treasury bonds, prices of short-term governments rose between 3/32 point and 1/4 point, while intermediates and long-term maturities rose about 11/32 point, according to Telerate Inc., a financial information service.
Yields on three-month Treasury bills auctioned Monday fell to 8.90% as the discount fell 5 basis points to 8.60%. Yields on six-month bills auctioned Monday fell to 9.15% as the discount fell 9 basis points to 8.64%. Yields on one-year bills fell to 9.22% as the discount fell 10 basis points to 8.53%.
The federal funds rate, the interest on overnight loans between banks, traded at 9.813%, down from 9.875% late Monday.
Dollar
The dollar finished higher against most major currencies, recovering from an early selloff.
Gold prices declined slightly in U.S. dealings after edging a bit higher on foreign markets. Republic National Bank of New York quoted a bid of $384.75 for an ounce of gold at 4 p.m. EDT, $2 lower than Monday’s late bid.
In Tokyo, the dollar closed at 131.17 Japanese yen, down from Monday’s late 131.38. In London, the dollar traded higher at 131.28 yen, and at 131.475 yen in New York, down from 131.55 yen Monday.
In London, one British pound cost $1.7030 late Tuesday, cheaper for buyers than Monday’s late level of $1.7050. Sterling stood at $1.69945 in New York, compared to $1.70625 on Monday.
Other late dollar rates in New York, compared to late Monday’s levels, included: 1.86655 West German marks, up from 1.86075; 1.64625 Swiss francs, up from 1.6420; 1.18925 Canadian dollars, unchanged; 6.3175 French francs, up from 6.3070, and 1,367.20 Italian lire, up from 1,364.625.
Other late rates for the dollar in Europe, compared to Monday’s late rates, included: 1.8625 West German marks, up from 1.8575; 1.6435 Swiss francs, up from 1.6395; 6.3065 French francs, up from 6.2975; 2.1000 Dutch guilders, up from 2.0960, and, 1.1910 Canadian dollars, up from 1.1890.
Italian markets were closed for a holiday. In London, the dollar closed at 1,366.00 Italian lire, up from 1,362.50 in Italy on Monday.
Gold bullion prices rose by less than $1 an ounce on markets abroad and then fell in U.S. trading.
On the Commodity Exchange in New York, gold bullion for current delivery fell to $385.70 from Monday’s $387.70.
The late price for gold in London, the major European precious metals market, was $385.75, up from $384.90. In Zurich, Switzerland, gold rose to $385 from $384.65.
Commodities
Soybean futures prices fell sharply Tuesday for the second consecutive session on the Chicago Board of Trade as scattered rainfall in the Midwest continued to cool drought fears. Wheat futures finished nearly unchanged.
On other markets, petroleum futures prices surged; hog futures advanced strongly while other livestock and meat markets were mixed, and precious metals prices declined.
Wheat settled 1.25 cents lower to 1.75 cents higher, with the contract for delivery in May at $4.1450 a bushel; corn was 3 cents to 5 cents lower, with May at $2.64 a bushel; oats were 5.50 cents to 7.25 cents lower, with May at $1.89 a bushel, and soybeans were 10 cents to 15 cents lower, with May at $7.3250 a bushel.
Overnight rain in the western Corn Belt and forecasts for more rain over the next few days prompted moderate to heavy selling of soybean, corn and oat futures contracts right from the opening bell.
