FINANCIAL MARKETS : STOCKS : Dow Slumps 23.27 in Late Program Trading
Stock prices tumbled in the final hour of trading Tuesday as weakness in the bond market and a lower dollar triggered a flurry of computer-driven sell programs.
The Dow Jones index of 30 industrial stocks fell 23.27 to 2,890.84.
Declining issues outnumbered advancing ones by nearly two to one in nationwide trading of New York Stock Exchange-listed stocks, with 529 up, 969 down and 498 unchanged. Big Board volume came to 147.63 million shares, up from 119.39 million Monday.
Michael Metz, market strategist at Oppenheimer & Co., said the dollar’s steep drop against the Japanese yen and weak bond prices scared stock traders by prompting concern that the Federal Reserve will be forced to tighten monetary policy to boost the dollar.
Tighter policy would drive the cost of money higher, hurting businesses and, in turn, stock and bond prices.
While the market treaded water most of the day, sell programs kicked in late in the session. “We suddenly got whipped with a real heady amount of program selling, and the market of course has been running quite thin,” said Gene Jay Seagle, analyst at Gruntal & Co.
The sell programs accelerated profit taking that already was under way, said Peter Vandenberg, a trader with Shearson Lehman Hutton.
Stock highlights:
* Pitney Bowes tumbled 6 3/8 to 43 1/2. The office machine company announced that analysts’ earnings expectations for the second quarter were too optimistic.
* On the other side of the earnings outlook, International Paper rose 1 1/8 to 52 3/4 after reporting second-quarter earnings of $1.70 a share, better than expected.
* Many high-tech stocks continued to advance, despite the market’s jitters. Investors are betting on strong second-quarter earnings from most tech companies. Tandem rose 1 to 23 1/4, Autodesk rose 1/2 to 57 and Western Digital added 1/4 to 13 1/4. But Tandon Corp. tumbled 1/2 to 3 1/8. It had run up sharply recently.
* Chatsworth-based Software Toolworks rose 1/2 to 19 1/4. The company sold 3.8 million new shares at $18.50 apiece.
* Pathe fell 3/8 to 2 3/8, a new low, on continued pessimism about its efforts to acquire MGM/UA. MGM lost 1/4 to 17 1/8.
* Litton Industries rose 7/8 to 73 3/8. Goldman Sachs traded a 490,000-share block of the stock, though it wasn’t revealed for whom.
Tokyo stocks closed lower as concern that Japanese interest rates may climb drove investors to the sidelines. The key 225-share Nikkei index was down 385.85 points to 32,152.43.
In London, stocks closed lower despite the pound’s surge. The Financial Times 100-share index closed down 10 points at 2,327.5. In Frankfurt, West Germany, the 30-share DAX ended 14.23 points lower at 1,909.63 after earlier dipping as low as 1,899.43.
