STOCKS : Dow Plunges 43.07, Its Biggest Fall in 3 Weeks
The stock market suffered its worst battering in three weeks Thursday as heightened worries over an outbreak of war in the Middle East and nervousness about upcoming U.S. economic data sent investors rushing for the exits.
The Dow Jones industrial index fell 43.07 points, or 1.6%, to close at 2,582.67. It was the biggest loss for the widely watched index since a 77-point drop Aug. 23.
Trading remained listless, with only 123.4 million shares changing hands on the New York Stock Exchange, compared to 129.9 million Wednesday.
In the broader market, declining issues outnumbered advances by more than 2 to 1 in nationwide trading of NYSE-listed stocks, with 430 up, 1,009 down and 506 unchanged.
Investors took some comfort from Federal Reserve Board Chairman Alan Greenspan’s statement that if a credible federal budget-deficit accord is reached between White House and congressional negotiators, the central bank would be inclined to relax its monetary policy.
But overall bearishness thwarted rally attempts, analysts said.
Stock prices, weak from the opening, tumbled more than 40 points in midafternoon after Iraq accused the United States of looking for an excuse to attack it and said it would hold President Bush personally responsible for any strike.
Futures-related selling amid the thin trading intensified the stock market’s slide.
“The bearishness is so thick that it’s hard to see through the gloom and doom,” said Gene Jay Seagle, director of technical research at Gruntal & Co.
Apprehension about today’s slew of economic figures--including wholesale inflation, retail sales and industrial production--prompted some investors to jettison stocks late in the day.
“Everyone is scared to death the numbers will reflect we’re in a recession or very close to one,” said Alice Sadlo, vice president at McDonald & Co.
A scarcity of bidders further worsened the share price declines, analysts said. “People like us aren’t buying,” said James Wright, chief investment officer at Banc One Asset Management. “We think there’s little chance of an easing” in interest rates.
The bearishness could mean the market is due for a rebound, Seagle said. “The people who really wanted out of this market are already out,” he said.
Market highlights:
* The Dow was led lower by IBM, off 2 7/8 to 105; United Technologies, off 1 3/4 to 47 7/8, and GE, off 1 5/8 to 60 3/8.
Tech stocks in general were pummeled on economic worries. Digital Equipment sank 2 3/8 to 59 1/4. DEC said brokerage Furman Selz downgraded its earnings estimates. Teradata dropped 2 to 17 1/2 after Prudential-Bache lowered its first-quarter earnings estimate, citing smaller order rates. Conner Peripherals fell 1 5/8 to 20 5/8 as investors continued to react negatively to the firm’s loss of its monopoly in 2 1/2-inch computer disk drives.
* Major bank stocks fell, on continued worries about the health of the banking system. Manufacturers Hanover lost 1 1/4 to 25 5/8, Wells Fargo dropped 1 5/8 to 54 1/4 and Security Pacific fell 1 1/8 to 26.
* McDonnell Douglas continued to climb, gaining 2 7/8 to 53 3/4. The stock has recovered sharply in recent weeks.
* Southland home builder J. M. Peters fell 5/8 to 3 1/4 after reporting a quarterly loss on lower revenue.
* Hilton Hotels, which said it expects third-quarter income from operations to fall about 50%, tumbled 2 1/4 to 29 1/4.
* Telephone stocks bucked the market trend, as some buyers sought safe-haven stocks. Ameritech rose 1/2 to 56 3/4, Pacific Telesis added 1/8 to 41 3/8 and BellAtlantic added 1/4 to 43 3/4.
* Amgen gained 1/2 to 48 1/2. Oppenheimer repeated its buy rating on the biotechnology company.
* Optical Radiation lost 1 1/2 to 30. But after the close, the firm declared a special $2-a-share cash dividend.
Overseas, stocks ended lower in Tokyo after a turbulent day. The 225-share Nikkei index closed down 141.06 at 25,075.08.
In London, stocks fell in thin, listless trading. The Financial Times 100-share index down 15.2 at 2,127.1. Shares also ended lower in Frankfurt, with the 30-share DAX index falling 15.39 to 1,582.95.
CREDIT Bonds Close Mixed Ahead of Key Report Treasury bond prices closed mixed Thursday as the credit market anticipated bad news in today’s inflation report but was encouraged by Greenspan’s comments on possible interest-rate easing by the Federal Reserve, traders said.
Many analysts have been urging the Fed to follow an easier monetary policy to reinvigorate the failing economy.
The Treasury’s benchmark 30-year bond fell 5/32 point, or $1.56 per $1,000 face amount. Its yield, which moves inversely to the price, rose to 8.96% from 8.94% late Wednesday.
The federal funds rate, the rate banks charge each other on overnight loans, was quoted at 7.875%, versus 7.938% Wednesday.
COMMODITIES Grains Fall Sharply; Oil Advances a Bit Corn and wheat futures prices fell--as expected--after the government forecast more supplies, but a drop in the soybean market surprised some observers.
On other commodity markets, crude oil futures rose slightly and precious metals were mixed.
Wheat futures settled 3.24 to 7 cents lower on the Chicago Board of Trade, with the contract for delivery in September at $2.5975 a bushel; corn was 5.50 cents to 8.50 cents lower, with September at $2.3325 a bushel; oats were 3.50 to 5 cents lower, with September at $1.07 a bushel, and soybeans were 7.25 cents lower to 1 cent higher, with September at $6.23 a bushel.
Crude oil and heating oil futures rose, but near-term gasoline fell on the New York Mercantile Exchange. Light sweet crude oil for October closed at $31.07 a barrel, up 10 cents; heating oil was 0.89 cent to 1.27 cents higher, with October at 83.48 cents a gallon, and unleaded gasoline was 0.48 lower to 0.84 cent higher, with October at 93.36 cents a gallon.
On the New York Commodity Exchange, gold for September rose 80 cents to $382.90 an ounce, but September silver lost 2.8 cents to $4.77.
CURRENCY Interest Rate Jitters Send Dollar Reeling The dollar plunged against all its major foreign counterparts in a slide triggered by speculation about lower U.S. interest rates.
Trading volume was heavy.
The dollar fell in New York to 136.25 Japanese yen, down from 138.07 Wednesday. It tumbled to 1.568 German marks from 1.591 Wednesday.
“The dollar came under intense pressure,” said John McCarthy, chief currency dealer at the Amsterdam Rotterdam Bank’s office in New York. “We saw a pretty substantial selloff. Volume was very, very heavy. I would characterize it as brisk with a capital ‘B’.”
The setback for the dollar came after Greenspan’s statement about lower interest rates. A decline in U.S. rates--especially after Japan pushed up its rates--would make the dollar less appealing to investors because it would cut returns on dollar-denominated holdings.
Market Roundup, D6
