Dow Skids 22.42 as Dollar Tumbles and Interest Rises
Stock prices posted a broad loss today as the dollar fell in foreign exchange and interest rates rose.
The dollar fell after finance ministers from the leading industrialized nations Saturday issued their sternest warning yet that they believed the U.S. currency was too high and threatened world economic prospects.
The Dow Jones average of 30 industrials dropped 22.42 points to a five-week low of 2,659.19.
Declining issues outnumbered advances by nearly 5 to 2 on the New York Stock Exchange, with 435 up, 1,018 down and 498 unchanged.
Big Board volume totaled 121.13 million shares, down from 133.35 million in the previous session.
The NYSE’s composite index fell 1.45 to 191.28.
Analysts said that dampened interest in stocks at a time when many investors were already concerned that the market was due for a “correction” after its sharp rise over the first eight months of the year.
Traders said that computer-driven program trading was also partly responsible for the steepness of the decline, which took place in thin trading.
Bond Prices Down
Bond prices fell in early trading today in response to the concerted attack on the dollar by central banks of the seven major industrialized countries.
The Treasury’s benchmark 30-year bond was off 15/32 point, or about $4.70 per $1,000 face amount, while its yield, which rises when prices fall, increased to 8.23% from 8.19% late Friday.
Finance officials from the Group of Seven nations met in Washington on Saturday and agreed that the dollar should not rise from current levels. They followed up on that communique by selling dollars from their reserves today.
In the secondary market for Treasury bonds, prices of short-term governments fell 1/8 point, intermediate maturities fell about 1/4 point and long-term issues were down roughly 1/2 point, according to Telerate Inc., the financial information service.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The Shearson Lehman Hutton daily Treasury bond index was unavailable because of computer problems at the source.
Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.11 to 331.10.