Dow Plunges 34.63 as Technologies Fall
Stock prices fell sharply today, retreating from the record highs they reached earlier in the week.
The Dow Jones average of 30 industrials dropped 34.63 to 2,820.92, cutting its gain for the week to 1.01 points.
Declining issues outnumbered advances by about 7 to 4 on the New York Stock Exchange, with 534 up, 944 down and 503 unchanged.
Big Board volume totaled 120.25 million shares, down from 155.14 million in the previous session.
The NYSE’s composite index lost 1.76 to 193.71.
Technology issues suffered some of the day’s biggest losses.
Analysts said the tone for the session was set overnight by word from Adobe Systems, a computer software company, that its earnings for the second quarter and full fiscal year were likely to fall short of analysts’ estimates.
After struggling through an extended rocky spell in the past few years, technology stocks have experienced a revival in the recent rally that has carried the market to new highs.
Brokers said the latest word from Adobe came as a fresh setback to fans of a market group that often is particularly vulnerable to earnings disappointments.
The bond market continued to lose ground today in the wake of unusually weak bidding in Thursday’s auction for new five-year Treasury notes.
The Treasury’s benchmark 30-year bond, which lost 7/16 point on Thursday, was down another 7/16 point, or about $4 for every $1,000 face amount, in light trading. Its yield, which rises when prices fall, rose to 8.65% from 8.61% late Thursday.
Liz Capo, a futures analyst with Stone and McCarthy Associates of Princeton, N.J., said the market was still reacting to the results of Thursday’s auction, at which the government sold $8.5 billion in notes for an average 8.54%, up slightly from the last auction in late February.
Market watchers said only about $2.60 in bids came in for every $1 in notes sold; five-year note auctions usually attract $3 in bids for every $1 sold.
Capo said the market also showed concern that the U.S. dollar continued to fall against the Japanese yen in European trading this morning. Dealers attributed the fall to remarks by assistant Treasury Secretary Sidney Jones that the dollar was undervalued against all currencies but the yen.
The market was less affected by today’s government report that consumer spending increased by 0.6%, the largest increase since it rose 1.2% in January. Consumer spending is considered a barometer of economic health since it accounts for about two-thirds of the nation’s economic activity.
The April increase was rosier than analysts expected, but Capo said trading in general was extremely slow because of the Memorial Day weekend.
“It’s very quiet. There’s not a lot going on because of the long weekend,” she said. “The combination of the weaker dollar and the poor results of yesterday’s five-year auction just brought the market in with a weaker tone.”
In the secondary market for Treasury bonds, prices of short-term governments fell 3/32 point, intermediate maturities fell 1/8 point to 3/8 point, and long-term issues were down as much as 7/16 point, according to Telerate Inc., a financial information service.
