Profit-Taking Kills Rally; Dow Closes Down 11.95
Stock prices fell today after a morning rally fizzled amid profit-taking and investor confusion about the direction of the economy, analysts said.
The Dow Jones industrial average closed off 11.95 points at 2,741.68. Much of the setback came in the last two hours of trading.
Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, with 834 issues down, 650 up and 492 unchanged.
Big Board volume totaled 154.64 million shares, against 150.36 million in the previous session.
The NYSE’s composite index fell 0.88 to 193.19.
At the American Stock Exchange, the market value index added 0.22 to 374.88.
Strength in the high technology sector helped pull the market higher in early dealings after International Business Machines Corp. announced a major restructuring. IBM said it planned a $4 billion share buyback, a cutback of 10,000 jobs and a fourth-quarter charge of $2.3 billion.
Takeover speculation also helped fuel early gains in other blue-chip issues, including transportation stocks.
But the blue-chip rally fizzled as the broader market lagged. Stock prices retreated amid profit-taking as investors took advantage of the market’s recent gains, traders said.
“That’s bound to happen. The market was going up with no real conviction,” said Charles Jensen, chief technical analyst for MKI Securities Corp.
Wall Street analysts said investor uncertainty about the economy and interest rates remained in the background helping depress prices ahead of Friday’s report on November unemployment. Recent economic data has pointed to a slowdown in economic growth.
Observers say stock investors are hoping the unemployment data confirms the slow-growth scenario and prompts the Federal Reserve to take steps to lower interest rates to stimulate economic growth and corporate earnings in 1990.
Bond prices barely budged in light early trading today that reflected investor reluctance to buy or sell ahead of a potentially market-moving report on U.S. unemployment later this week.
The Treasury’s benchmark 30-year bond remained unchanged in value and its yield stayed at the late Monday level of 8.72%. Shorter maturities also were little changed.
In the secondary market for Treasury bonds, prices of short-term and long-term government issues were unchanged, while intermediate maturities rose 1/32 of a point, the Telerate 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.
