Bearish Remarks Send Dow Tumbling 24.89

From Times Wire Services

Blue chips tumbled Wednesday after bearish comments by a prominent Wall Street adviser and heavy program trading combined to send prices to their lowest finish in about two weeks.

The Dow Jones index of 30 industrials dropped 24.89 to 2,719.79 after losing 7.41 Tuesday.

The pullback was one of only a handful of setbacks on the market since the start of a summer rally that carried stocks to two all-time highs last week. The market has been rising amid fresh indications of a growing economy.

Declining issues outnumbered advances by about 5 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 433 up, 1,091 down and 456 unchanged.

Big Board volume totaled 161.80 million shares, up from 145.18 million Tuesday.


Traders attributed part of the selloff to comments by Barton Biggs, the influential chief investment strategist at Morgan Stanley & Co. Biggs told clients to dump 10% of their stock in industries that included airlines, hotels and broadcast media.

“It (Biggs’ recommendation) was a major factor, but this is a market where participants are very insecure,” said Alfred Goldman, A. G. Edwards & Son’s director of technical research. “The buyers were nervous and backed away.”

A number of forecasters have predicted that the market would take a breather, and the traditionally weak month of September has been seen as a likely time for a correction.

“Stocks are ripe for pulling back at this point,” said A. C. Moore, Argus Research’s director of research. “They’re extended on a price basis and interest rates are not declining, which would be a help in sustaining market gains.”

Losers among the blue chips included Merck, down 1 at 72 1/4; American Telephone & Telegraph, down 3/4 at 39 1/8; Procter & Gamble, down 1 3/4 at 126; International Business Machines, down 1 at 116 3/4, and Coca-Cola, down 7/8 at 44 3/4.

Pep Boys-Manny, Moe & Jack fell 2 1/8 to 13 1/2 to rank as the day’s biggest percentage loser among Big Board issues. Late Tuesday, the company reported lower second-quarter earnings.

Auto issues were mixed after reports of late-August domestic car sales that generally exceeded expectations. General Motors rose 1/8 to 50 1/8, while Ford Motor dipped 5/8 to 53 and Chrysler was unchanged at 27.

Goodyear Tire & Rubber climbed 4 1/8 to 57 5/8 on takeover rumors and speculation. The company said it had no knowledge of any impending bid.

Phelps Dodge picked up 2 1/4 to 77 1/4. The company said its directors declared a special dividend of $10 a share and announced plans to buy back as many as 2 million shares of stock.

Share prices retreated in widespread institutional selling on the Tokyo Stock Exchange. The key Nikkei 225-share average, which declined 41.83 yen Tuesday, lost 170.64 yen to close at 34,271.31 yen.

Stock prices also fell sharply on the London Stock Exchange in what analysts described as some profit taking after a recent run-up in prices that had lifted one key market index to its highest level since the October, 1987, stock market crash. The Financial Times 100-share index fell 35.2, or 1.4%, to close at 2,390.8.


Bond prices were mostly higher in uneventful trading.

The Treasury’s benchmark 30-year bond rose 9/32 point, or $2.81, per $1,000 face amount. Its yield declined to 8.10% from 8.13% late Tuesday.

Traders said there was little activity in the absence of market-moving economic news. Treasury bill prices were lower while longer-term bond prices ranged from unchanged to up 5/16 point.

The rise in the long bond was attributed to a intra-day dip in the federal funds rate and some short-selling in which traders bought back positions sold earlier in the day.

The federal funds rate, the interest on overnight loans between banks, was quoted at 9%, up from 8.938% late Tuesday.


The dollar drifted lower against major foreign currencies amid market concerns of higher interest rates overseas.

Currency traders attributed the dollar’s retreat Wednesday largely to profit taking and speculation that West Germany and Japan might hike their interest rates to thwart the dollar’s recent strength.

Reported continued intervention by the Bank of Japan also depressed the dollar.

But Earl I. Johnson, a trader for Harris Trust & Co. in Chicago, said overall sentiment toward the dollar remained bullish. “We’re just seeing a technical retrenchment,” he said.

Johnson predicted that West Germany and Japan would keep their interest rates stable, paving the way for further increases in the dollar later this week.

The dollar closed in Tokyo at 146.65 yen, unchanged from Tuesday. It traded at 146.15 yen in London and fell to 146.10 yen in New York, down from 146.75 yen Tuesday.

The dollar was lower against the British pound Wednesday. Each British pound cost $1.5552, more expensive than Tuesday’s $1.5385. Sterling fetched $1.5525 in New York, up from $1.5385.


Prices of copper futures tumbled for a third straight day of losses on New York’s Commodity Exchange on perceptions that labor tensions are easing in countries where miner strikes have disrupted copper production.

On other markets, energy futures rose after an oil refinery explosion in California; meat futures rallied on renewed hopes that pork bellies will be shipped to Poland, and corn futures gained on dimming crop prospects.

Copper futures settled 2.55 to 3.90 cents lower, with the contract for delivery in September at $1.2575 a pound, a two-week low.

Copper futures had traded above $1.36 a pound as recently as Aug. 25 on supply fears prompted by strikes in Peru and Canada and mine shutdowns in Mexico and Papua New Guinea.

Since then, the Peruvian strike has ended, a strike has begun at a mine in Chile and the Bouganville mine in Papua New Guinea reopened only to be closed a day later by a resurgence of the land owner-led violence that prompted the original shutdown in July.

Precious metal futures advanced on the Comex, largely in response to the weaker dollar.

Gold settled $2 to $3 higher, with October at $363.70 an ounce; silver was 4 to 4.7 cents higher, with September at $5.103 an ounce.

Energy futures prices climbed on the New York Mercantile Exchange after reports of an explosion Tuesday that shut down a Shell Oil Co. refinery near San Francisco.

West Texas Intermediate crude oil settled 4 to 23 cents higher, with October at $19.28 a barrel; heating oil was 0.14 cent lower to 0.91 cent higher, with October at 55.48 cents a gallon, and unleaded gasoline was 0.30 cent to 1.35 cents higher, with October at 55.11 cents a gallon.

Pork belly futures led a rally in the livestock and meat complex on the Chicago Mercantile Exchange on word that the Polish government had requested 50,000 metric tons each of pork bellies and beef in food aid from the United States.

Live cattle rose 0.03 to 0.27 cent, with October at 72.37 cents a pound; feeder cattle were 0.07 to 0.35 cent higher, with October at 81.47 cents a pound; hogs were 0.05 to 0.88 cent higher, with October at 39.62 cents a pound, and frozen pork bellies were 1.20 to 1.70 cents higher with February at 44.82 cents a pound.

Corn and soybean futures prices rose moderately on the Chicago Board of Trade amid expectations that the Agriculture Department will reduce its harvest estimates for those commodities in a crop report due out next week.