STOCKS : Dow Slips 5.85, Averts Larger Loss Late in Day
The stock market settled broadly lower in volatile trading Monday, pressured by interest-rate worries and concern about financing of corporate takeovers.
The Dow Jones index of 30 industrials fell 5.85 points to 2,553.38.
Declining issues outnumbered advancers by about 9 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 961 issues down, 541 up and 450 unchanged.
Big Board volume came to 150.77 million shares, down from Friday’s 198.19 million.
Traders said they thought that the market’s trend was still down although the market may be trying to stabilize.
An early 10-point gain in the key 30-stock index gave way to a 30-point drop in late afternoon. But the Dow regained most of its loss in the last hour of trading.
“The course of least resistance is toward the downside,” said William Raftery, technical analyst at Smith Barney, Harris Upham & Co.
“A lot of investors are seriously considering the notion of a long bear market, and I don’t think anybody took that idea seriously until the last week or so,” said Hugh Johnson of First Albany Co.
“Program trading was a very large part,” said Phillip Puccio, managing director of equity trading for Prudential-Bache Securities Inc. “Futures seemed to be wagging the dog. With institutional trading you would see more liquidity and less volatility.”
Transportation issues were among the hardest hit. The Dow Jones transportation index fell 26.67 to 1,074.50.
Maxxam Inc. fell 4 1/4 at 36 1/4 on the American Stock Exchange amid investor concern about a situation involving one of its unit’s annuities. The annuities of the firm’s forest products division are held by First Executive Corp., the life insurance company struggling because of its dependence of the junk bond market.
Brisk buying lifted stock prices in thin trading on the Tokyo Stock Exchange. The Nikkei 225-share average rose 299.63 points to 37,173.70 after shedding 95.04 Friday.
In London, stocks ended a cautious session firmer. The Financial Times 100-share index closed up 14.3 points at 2,328.8.
CURRENCY Dollar Follows Stock Market Down The dollar fell against major foreign currencies in light trading in reaction to the drop in stock prices.
Gold prices also slipped. On New York’s Commodity Exchange, an ounce of gold fell $1 to close at $419.10 an ounce. Republic National Bank later quoted a bid of $418.20 an ounce, down $1.80 from Friday.
Dealers said the dollar began trading higher in New York after it lost strength overnight on overseas markets, where the West German mark rose in value against the dollar in reaction to an announcement of earlier elections in East Germany and an easing of tension in Soviet Azerbaijan.
But then stock prices fell on Wall Street, sending the dollar lower.
COMMODITIES Soybeans Rebound After 6-Week Slump Soybean futures prices rebounded sharply from life-of-contract lows in a move that could mark a turnaround in the market after a six-week slide.
Most grain futures also advanced on the Chicago Board of Trade. On other commodity markets, oil futures rose strongly, pork bellies posted limit losses while livestock futures were mixed, and precious metals declined.
Soybean futures settled 5 to 8.25 cents higher in Chicago, with the contract for delivery in March up 5 cents at $5.635 a bushel.
Wheat futures ended 2.5 cents lower to 1.5 cents higher, with March at $3.7875 a bushel; corn was 0.25 cent to 1.50 cents higher, with March at $2.395 a bushel, and oats were 1 cent higher across the board, with March at $1.3825 a bushel.
During the session, March soybeans traded as low as $5.535 a bushel, eclipsing the contract’s previous low of $5.575, but finished above the previous session’s high of $5.61.
Technical analysts call such a performance a “key reversal.” It often signals the end of a long-term trend.
