Dow Takes a 24.89 Dive Amid Questions About Fed’s Policies
Stock prices declined broadly today in an atmosphere of uncertainty about the outlook for Federal Reserve policy and interest rates.
The Dow Jones average of 30 industrials dropped 24.89 points to 2,719.79.
Declining issues outnumbered advances by about 5 to 2 on the New York Stock Exchange, with 414 up, 1085 down and 462 unchanged.
Big Board volume totaled 161.80 million shares, against 145.18 million in the previous session.
The NYSE’s composite index fell 1.66 to 194.18.
Analysts said a belief is spreading among investors that the Federal Reserve is unlikely to relax its credit policy further any time soon, given a stronger-than-expected economy.
“At a minimum, the Fed is not going to provide the fuel to drive the market further,” said Hugh Johnson at First Albany Corp. in Albany, N.Y.
Johnson also said portfolio managers at investing institutions seemed to be in a wary mood.
“Institutional money managers have had an exceptionally good year, and they’re all trying to figure out how to protect their gains. Most of them don’t have many alternatives other than to sell stocks,” he observed.
Bond prices edged downward in listless early trading today.
The Treasury’s benchmark 30-year bond was down 1/8 point, or $1.25 per $1,000 face amount, around midday. Its yield, which rises when prices fall, increased to 8.14% from 8.13% late Tuesday.
Traders said there was little activity in the absence of market-moving economic news. They predicted that prices would continue to drift lower through next week, when several pieces of new economic data are to be released.
On Tuesday, bond prices also fell slightly in a post-Labor Day market without major influences.
“There is no news to give any direction, and I think things are just weighing on the market,” said Steven A. Wood, an economist with BankAmerica Capital Markets Group in San Francisco.
Wood said data on August retail sales, inflation and merchandise trade are the next major economic barometers scheduled for release, toward the end of next week.
The federal funds rate, the interest on overnight loans between banks, was quoted at 9 1/4%, up from 8 15/16% late Tuesday.
