Dow Plunges 59.41 to New Low for Year : Index Falls to 2,452.97; Activity Marked by Heavy Selling in Bank Issues
The stock market sank to new lows for the year today in activity marked by heavy selling of the battered bank issues.
The Dow Jones average of 30 industrials fell 59.41 to 2,452.97, its lowest close since it stood at 2,452.77 on July 3, 1989.
Declining issues outnumbered advances by about 6 to 1 on the New York Stock Exchange, with 236 up, 1,418 down and 329 unchanged.
Big Board volume totaled 162.21 million shares, against 201.05 million in the previous session.
The NYSE’s composite index dropped 3.52 to 167.51.
Analysts said investors were bracing for more bad tidings from the banking industry after Chase Manhattan Corp.’s announcement Friday of a dividend cut, new reserves for loan losses and a staff reduction of 5,000 jobs.
The news by itself did not come as any great surprise to Wall Street, which was well aware of widespread credit problems facing the banks.
Nevertheless, it evidently served to intensify the recession worries that have been depressing stock prices since midsummer.
Brokers noted that the market also had to contend with another big jump in world oil prices. Crude oil futures for November delivery surpassed $38 a barrel on the New York Mercantile Exchange.
Bond prices fell in early trading.
The Treasury’s benchmark 30-year bond fell 1/2 point, or $5 per $1,000 face amount. Its yield, which rises when the price falls, climbed to 9.17% from 9.11% late Friday.
The continued rise in oil prices since Iraq’s Aug. 2 invasion of Kuwait has intensified the bond market’s concern that inflation is worsening.
Inflation hurts bonds because it erodes their value and makes it less likely that the Federal Reserve will ease interest rates. Lower rates benefit fixed-return securities such as bonds.
In early trading, short-term Treasuries fell between 1/8 point and 9/32 point, intermediate maturities ranged from 9/32 point to 3/8 point lower, and long-term issues lost as much as 1/2 point.
