STOCKS : Dow Falls 12 on Late Round of Computer Sales
The stock market stumbled Tuesday when a late round of computer-triggered selling wiped out initial gains and pushed the key index down for the fifth consecutive session.
The Dow Jones index of 30 industrials fell 12.17 to 2,654.50. Since last Tuesday the index has lost 111.27 points.
Declining issues outnumbered advancing ones in nationwide trading of New York Stock Exchange-listed stocks, with 833 down, 652 up and 506 unchanged.
Big Board volume edged up to 137.36 million shares, from 135.15 million the day before.
Interest rates continued to be the market’s key focus, with stocks mirroring the credit market for much of the session.
When bond prices advanced in the early going despite the government’s better than expected report on March durable goods orders, stocks advanced. But when bond prices faltered, their yields rising in tandem, stocks struggled to hold onto initial gains.
An hour before the closing bell, computer-triggered sell programs kicked in and took the stock market down. “Given how light the volume is, the market couldn’t recover from that little straw,” said Dennis Jarrett, chief market analyst at Kidder, Peabody & Co.
Higher interest rates and lower stock valuations make corporate borrowing more expensive.
Alfred E. Goldman, a vice president at A. G. Edwards & Sons Inc. in St. Louis, called the market’s performance “a little disappointing because it tried to go up--both the generals and the troops.”
With plenty of cash on the sidelines, investors so far have not had to dump blocks of stocks to buy bonds. But there is concern that the selling of stocks could accelerate if yields go higher.
Government bonds yielding close to 9% are an attractive alternative to stocks. “It’s a portfolio decision,” Jarrett said, and “it could have an impact.”
Ames Department Stores, the most actively traded Big Board issue with 3.8 million shares changing hands, fell 5/8 to 1 3/8. The chain hired a bankruptcy lawyer and was reported to be considering seeking Chapter 11 protection.
Elsewhere in the retail sector, Sears was off 1 1/8 at 35 3/8 on word of a 59% decline in first-quarter profits.
Vons jumped 1 7/8 to 22 5/8 on news of strong quarterly earnings. Other stocks affected by earnings reports included Allergan, up 1/2 to 15, and Liz Claiborne, up 3/4 to 26 1/4.
Jacobs Engineering was battered despite the apparent lack of a reason. The stock fell 1 1/8 to 19 3/4.
Tandon Corp. rose 1/8 to 2 1/16 despite announcing that it was no longer retaining an investment bank to study the possible sale of the firm. Tandon has recently seen its computer business improve.
Discouraged by bearish Wall Street stock trading and another weakening of the Japanese yen, prices fell for the third consecutive day on the Tokyo Stock Exchange. The Nikkei 225-share index fell 177.69 points to close at 29,501.38.
In London, share prices staged a late recovery to finish mostly higher on London’s Stock Exchange. The Financial Times 100-share index rose 0.7 point to 2,159.9.
CREDIT Bonds Mixed Over Economic Concerns Bond prices finished mixed, as short-term issues declined, while longer-term issues were unchanged to slightly higher.
The Treasury’s closely watched 30-year bond edged up 1/32 point, or 31 cents for every $1,000 in face value. Its yield, which falls when prices rise, slipped to 8.95% from 8.96% late Monday.
Through Monday, the 30-year bond had plunged more than $41 per $1,000 over seven trading days in response to signs of increasing inflation, a stronger economy and worries about upcoming bond issues, including the Treasury’s May quarterly refunding.
Higher inflation and an economic upturn could prompt the Federal Reserve to keep interest rates high. Higher rates erode the value of fixed-return investments such as bonds.
Analysts said bond prices recovered Tuesday morning but later were driven lower by unconfirmed rumors that the Fed planned to tighten interest rates soon.
Jay Goldinger, a principal of Capital Insight Inc. in Beverly Hills, described the market as “very jittery. . . . Behind every buyer they think there’s the ghost of another seller,” he said.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.188%, unchanged from Monday.
CURRENCY Dollar Declines in Active Trading The dollar declined against all major currencies except the Japanese yen.
Foreign exchange dealers said trading was moderately active and most of the attention was directed toward the yen. Japan’s currency slumped across the board, benefiting the West German mark, the Swiss franc and other currencies.
“It was a yen story today. The yen resumed its terribly weak posture,” said Richard Levine, a vice president of foreign exchange and precious metals at Elders Futures Inc. in New York.
COMMODITIES Precious Metals Fall as Interest Rates Rise Precious metal futures prices fell, reflecting a general lack of investor interest in gold and silver in the face of rising interest rates.
On other commodity markets, copper futures rose sharply, grains and soybeans retreated; energy futures were mixed, and livestock and meat futures were mixed.
Gold futures settled $3 to $3.10 lower on New York’s Commodity Exchange, with the contract for delivery in April at $375.90 an ounce; silver was 10 cents lower across the board, with May at about $5 an ounce.
Platinum futures fell $6.50 across the board on the New York Mercantile Exchange, to $487.80 for July.
