Stocks : Dow Falls 24; Dollar Jitters Blamed
The stock market sank in moderate trading Tuesday amid concern about the dollar’s strength and news of a sharp gain in April durable goods orders.
The Dow Jones index of 30 industrials fell 24.01 points to finish the day at 2,478.01.
Declining issues outnumbered advancers by about 8 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 938 issues down, 594 up and 469 unchanged.
The stock market opened lower after a stronger than expected durable goods report for April.
The Commerce Department reported that orders to factories for “big-ticket” items such as aircraft and machinery climbed 2.9% in April, the strongest increase in four months. In March, durable goods orders rose just 1%, a figure the market expected to be repeated in April.
The increase reflected renewed demand in all major industries after broad-based weakness in the first quarter and despite some slackening off in other sectors.
“No matter how you break it up, it is a strong report,” said Thomas F. Carpenter, economist for ASB Capital Management. “The industrial sector has remained resilient to higher interest rates . . . and from this point forward it is not at all clear that the economy will weaken. In fact, it indicates the economy will firm.”
Some analysts said, however, that the durable goods report was an excuse for predictable profit taking after a nine-week rally.
“The primary reason for the selloff is we’ve come a long way in nine weeks. The selling was not nasty; it did not get out of hand,” said Alfred E. Goldman, market analyst with A. G. Edwards & Sons. “It was more profit taking and a buyers’ strike.”
Early in the day, when the dollar softened slightly against the Japanese yen and West German mark, investors worried that a slide in the dollar could drive away foreign investors.
But it resumed its advance after midday, and that helped send prices lower.
“The dollar has been making people feel more comfortable,” Goldman said. “But now it has gotten a bit too strong. In a vulnerable market, that raises questions about what that’s going to do to the trade deficit.”
Analysts said, however, that Tuesday’s weakness reflected only a brief pause and that the dominant trend in the stock market is still upward.
Volume on the floor of the Big Board came to 187.69 million shares, up from 185.01 million in Monday’s session. Except for a few meek attempts to rally, trading activity remained moderate, traders said.
Among actively traded issues on the NYSE, Pan Am rose 3/8 to 4 3/4 amid reports that the airline, as well as other rivals, would make a takeover offer for Northwest Airlines’ parent, NWA Inc., later this month. NWA gained 2 1/8 to 106 and Warner Communications rose 1/2 to 51 7/8.
IBM dropped 3/8 to 109 1/2, AT&T; fell 1 1/8 to 34 5/8 and General Motors lost 1 1/2 to 40 7/8.
Stock prices plummeted on the Tokyo Stock Exchange in slow but volatile trading following a three-session winning streak as the dollar continued its unchecked rise against the Japanese yen. The Nikkei 225-share index declined 251.25 points to close at 33,816.61.
Share prices also slumped for the second day on the London Stock Exchange, as the pound’s continued decline raised fears that British interest rates may be headed higher. The Financial Times-Stock Exchange 100-share index fell 17.4 points to close at 2,151.6.
Commodities
The dollar showed just enough weakness early in the trading day to give a boost to gold and silver futures prices on New York’s Commodity Exchange, but platinum prices retreated as demand for the metal ebbed.
On other markets, grain and soybean futures were mostly lower, livestock prices were higher, pork futures were mixed and fuel prices climbed.
The dollar continued to exert influence on precious metals, but in a positive manner, as gold and silver rose for the first time in days.
Credit
Most bond prices weakened, hurt by the Commerce Department’s report on durable goods orders.
The Treasury’s benchmark 30-year bond fell about $2.50 per $1,000 face amount, while its yield, which moves in the opposite direction from price, rose to 8.61% from 8.59% late Monday.
In the secondary market for Treasury bonds, prices of short-term governments fell about 1/16 point, intermediate maturities fell about 1/4 point and long-term issues also fell about 1/4 point, the Telerate Inc. financial information service reported.
The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.
The federal funds rate, the interest on overnight loans between banks, traded at 9.688%, unchanged from late Monday.
