FINANCIAL MARKETS : STOCKS : Economic Concerns Push Dow Down 7.46
New worries about the economy, prompted by weak car sales and problems at two major retailers, pushed stocks broadly lower Thursday. The Dow Jones index of 30 industrials, up 32.85 points in the two preceding sessions, dropped 7.46 to 2,753.63.
Declining issues outnumbered advances by nearly 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 529 up, 996 down and 494 unchanged.
Big Board volume retreated to 178.70 million shares from Wednesday’s 184.66 million.
Wednesday’s report by auto makers that car sales in early December fell to their lowest level in more than two years created fresh worries about weakness in the industrial economy, analysts said.
Analysts said traders were also unsettled by word late Wednesday of deepening problems in the debt-burdened retailing empire of Campeau Corp. in Toronto.
Campeau officials said its Federated Department Stores and Allied Stores operations might file for bankruptcy protection in early 1990 if new agreements can’t be reached with lenders.
Adding to the wary mood was anticipation of a quarterly “triple-witching hour” today involving a series of expiring options and futures on stock indexes.
Also today, the government is due to report the producer price index for November and the nation’s international trade position for October.
General Motors fell 1 1/8 to 43 1/2. A prominently featured story in the Wall Street Journal discussed the company’s problems with a shrinking share of the U.S. car market.
Among other actively traded blue chips, American Telephone & Telegraph dropped 3/8 to 46 1/4, Exxon fell 1 1/8 to 49 5/8, Ford Motor dipped 3/4 to 44, and Philip Morris lost 5/8 to 42 3/8.
In the recently beleaguered computer and technology sector, International Business Machines fell 3/4 to 95 1/8, Digital Equipment 2 3/8 to 80 1/4, and Apple Computer 1 1/8 to 34 7/8 in the over-the-counter market.
Mesa Limited Partnership tumbled 1 1/4 to 7 5/8. The partnership said it would stop paying cash distributions next year, citing depressed prices for natural gas.
Polygram N.V. led the active list, trading at 16 7/8 after an initial public offering of 32 million shares at 16 by the company’s parent, Philips N.V.
UAL fell 5 1/2 to 163 1/4 as hopes continued to dim for a new deal to replace the planned buyout by an employee-management group that fell through two months ago. Elsewhere in the airline group, AMR lost 1 to 63 and Delta Air Lines was down 1/2 at 68 1/8.
Prices on the Tokyo Stock Exchange closed mixed reflecting concern among some investors over the market’s recent high-paced advance. The Nikkei 225-share index surged 118.28 points to close at another new high of 38,180.70.
Stocks fell sharply in London, as a weak performance on Wall Street encouraged a round of profit taking. The Financial Times 100-share index ended the day down 19.2 points to 2,367.0.
CREDIT Bond Prices Rise on Fed Speculation Bond prices rose on speculation that the Federal Reserve may ease interest rates and on figures indicating that weekly unemployment insurance claims had risen.
The Treasury’s bellwether 30-year bond rose 3/8 point, or $3.75 for every $1,000 in face value. Its yield, which declines when the price rises, fell to 7.85% from 7.88% late Wednesday.
Economists said the market was bolstered by speculation that the Fed would move to push interest rates lower--a move that would push up bond prices--in the near term, possibly today after the release of producer price index and industrial production figures.
Ray Stone, a managing director of Stone & McCarthy Research Associates Inc., said Thursday’s gains began with a government report that weekly unemployment insurance claims shot up by 86,000 to 396,000 in the week ended Dec. 2.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.438%, down from 8.563% late Wednesday.
CURRENCY Dollar Ends Mixed in Quiet Trading The dollar finished mixed in dull trading on world currency markets.
Gold prices slipped overseas but appeared to stabilize in U.S. dealings after Wednesday’s steep plunge.
On the Commodity Exchange in New York, gold bullion for current delivery settled at $408.30 an ounce, up 20 cents from late Wednesday. Republic National Bank in New York quoted a late bid for gold at $408.30 an ounce, up 30 cents.
Traders said the market was extremely quiet.
Dealers and investors are awaiting today’s release of the October trade report and producer prices and industrial production data for November.
In Tokyo, the dollar rose to close at 144.07 Japanese yen, from 143.70 yen on Wednesday. But later in London, it fell to 144.00 yen. In New York, the dollar finished at 144.15 yen, up from 144.05 yen late Wednesday.
In London, the British pound rose to $1.5970 from $1.5955 late Wednesday. In New York it cost $1.6010 to buy one pound, more expensive than Wednesday’s $1.6000.
COMMODITIES Hog Prices Surge as Cold Continues Prices for near-term deliveries of hogs surged more than a penny a pound on the Chicago Mercantile Exchange as frigid weather in the Midwest slowed marketings and reduced slaughter rates.
The cold spell, which is expected to continue through the weekend, also contributed to gains in the cattle and grain futures markets.
On other commodity markets, oil futures retreated and precious metals were mostly higher.
Hog futures settled 0.08 cent to 1.05 cents higher, with the contract for delivery in December up 1.05 cents at 52.75 cents a pound.
Live cattle futures were 0.15 to 0.60 cent higher, with December at 77.40 cents a pound; feeder cattle were 0.20 to 0.43 cent higher, with January at 83.72 cents a pound, and frozen pork bellies were 1.10 to 1.60 cents lower, with February at 50.32 cents a pound.
The gains in hog futures extended a three-month advance from prices near 40 cents a pound in mid-September.
Cold weather typically supports the hog market for two reasons: Animals tend to burn energy rapidly in cold weather, causing weight loss when they are moved around; and farmers, like everyone else, tend to stay indoors in cold weather.
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