Financial Markets : Market Slumps in Late Trading; Dow Dips 3.47
The stock market posted a small loss Wednesday, bogging down after a short-lived run toward record highs.
The Dow Jones index of 30 industrial stocks, up about 10 points at its best afternoon level, finished the day with a 3.47 loss at 2,929.95. The index reached its closing peak of 2,935.19 on June 4.
Declining issues slightly outnumbered advances in nationwide trading of New York Stock Exchange-listed stocks, with 722 up, 786 down and 499 unchanged.
The Commerce Department reported Wednesday morning that retail sales fell 0.7% in May, registering a sharper decline than most analysts had expected.
That evidence of continued softness in business activity helped push interest rates lower in the credit markets.
But stock traders didn’t show such clear-cut enthusiasm over the news. Analysts said investors were a little unsettled by signs that consumer spending was slipping at a time when economic growth appears to be sluggish at best.
Auto issues were fractionally lower after early-June figures for domestic car sales came in below expectations. General Motors lost 1/4 to 50, Ford Motor fell 1/4 to 46 3/8, and Chrysler dropped 3/8 to 15 7/8.
It was a disastrous day for S&L; and bank stocks. S&L; stocks plunged after HomeFed’s announcement that problem loans rose in May. HomeFed tumbled 8 1/4 to 25. Great Western Financial slumped 1 5/8 to 18 7/8, H. F. Ahmanson dropped 1 to 21 1/4, CalFed slumped 1 7/8 to 19 1/2 and Golden West Financial was down 1 7/8 at 31 3/8.
Wells Fargo lost 2 3/8 to 81 5/8 after Moody’s downgraded the company’s debt. Security Pacific, also downgraded, lost 3/4 to 40 3/8.
Over-the-counter stocks bucked the overall down market trend. The NASDAQ composite index rose 2.30 points to 468.86, as investors continued to hunt among smaller stocks. Some Southland-based OTC stocks that helped lead the advance included K-Swiss, up 1 1/4 to 24 3/4; Syncor, up 1/4 to 9 3/8; CIMCO, up 1/2 to 13, and Amgen, up 1 1/2 to 74.
Big Board volume totaled 158.91 million shares, up slightly from 157.10 million shares traded Tuesday.
In Tokyo, stocks were mildly firmer at the close in thin trading, breaking a three-day losing streak. The Nikkei 225-share index rose 49.46 points to close at 32,371.77.
Shares surged to a six-month high on the London Stock Exchange. The Financial Times 100-share index closed 34.7 points higher at 2,405.4.
In Frankfurt, West Germany, shares ended 0.7% lower after a volatile session. The 30-share DAX index ended at 1,787.39, down 12.97 points.
CREDIT Bond Prices Rise on Retail Sales News Bond prices, which have been flat the last few sessions, gained ground after the release of a government report showing unexpectedly weak retail sales in May.
The Treasury’s key 30-year bond rose 27/32 point, or $8.44 per $1,000 face amount. Its yield, which falls when prices rise, dropped to 8.38% from 8.45% late Tuesday.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 15%, up from 8.188% on Tuesday. The figure often fluctuates wildly on Wednesday when banks must report their reserves to federal authorities.
CURRENCY Dollar Slumps in Domestic Trading The dollar ended weaker against most major currencies after a mixed performance overseas, while the soaring British pound continued to take center stage.
Currency dealers blamed the dollar’s decline largely on technical factors, with traders selling the dollar to buy the West German mark and Swiss franc.
Meanwhile, high interest rates and growing expectation that Britain will join the European Monetary System later this year continued to shore up sterling.
The pound rose to a nearly four-month high against the dollar, dealers said. It traded at $1.7070 in London, up from $1.7020 on Tuesday, and at $1.7115 in New York, up from $1.7035.
COMMODITIES Gold Futures Are Continuing to Slide Gold futures prices flirted with $350 an ounce, dropping to within 50 cents of that psychologically important level before rebounding to $352, the lowest daily settlement on New York’s Commodity Exchange in nearly four years.
Gold futures settled $3.70 to $4.90 lower, with the contract for delivery in June down $3.70 at $352 an ounce, the lowest settlement of a Comex gold contract since July 30, 1986.
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