Dow Falls 33.49; Mixed Signals Shake Market
Wall Street stocks closed sharply lower today after a day of erratic trading in which the market was pushed and pulled by contrary economic signals and mixed corporate earnings.
The Dow Jones industrial average fell 33.49 points to close at 2,659.13, after being up as much as 12 points.
In the broader market, declining stocks exceeded gaining issues by a 4-3 ratio on moderate New York Stock Exchange volume of about 171 million shares.
Traders said disappointing earnings results for IBM and Aluminum Co. of America had weighed on the market.
News that the November trade deficit was an unexpectedly wide $10.5 billion was offset by another government report showing greater than expected industrial production for December.
Bond prices were recovering in early trading today after a sharp sell-off Tuesday.
The Treasury’s closely watched 30-year bond was up 1/8 point, or $1.25 for every $1,000 in face value, at around midday. The bond’s yield, which declines when its price rises, had edged down to 8.23% from 8.24% late Tuesday.
Analysts attributed the bout of buying to a new government report on business inventories and sales and to an unconfirmed rumor that the Federal Reserve had decided not to ease its credit policy for about three months.
“It’s just a little bit of bargain hunting but really nothing to speak of,” said Kevin Flanagan, a money-market economist at Dean Witter Reynolds Inc.
He said the bond market showed little reaction to a report today that the U.S. trade deficit widened in November to $10.5 billion, its worst showing in 11 months.
In the secondary market for Treasury securities, short-term government issues had gained 1/16 point to 3/32 point, intermediate maturities had risen 1/16 point to 1/8 point and long-term issues also had advanced 1/16 point to 1/8 point, according to the Telerate Inc. 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, which measures price movements on outstanding Treasury issues with maturities of a year or longer, was up 1.70 at 1,175.13.
Yields on three-month Treasury bills rose to 7.94% as the discount gained 2 basis points at 7.69%. Yields on six-month bills rose to 7.94% as the discount edged up 1 basis point to 7.54%. Yields on one-year bills fell to 7.86% as the discount declined 4 basis points.
