STOCKS : Dow Falls 15.84 to Close at 2,489 in Slow Trading
Rising oil prices combined with computer-driven sell programs and economic worries to send stocks lower Wednesday.
The Dow Jones industrial index fell 15.84 points to 2,489.36 in thin trading. Most of the losses came in the afternoon.
Big Board volume declined to 135.5 million shares, the lowest since Sept. 17 and significantly down from Tuesday’s 188.3 million shares. In the broader market, declining issues outnumbered advances by about 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 564 up, 972 down and 437 unchanged.
Most broader indexes finished with greater losses than the Dow. The Standard & Poor’s 500 index slumped 1.2%, losing 3.81 points to 311.40.
A key factor in the afternoon drop was the price of oil, which jumped after a two-day slide. Crude oil for November rose $3.37 on the New York Mercantile Exchange to $37.32 a barrel.
“Oil had a lot to do with it,” said Dale Tills, manager of institutional equities at Charles Schwab & Co. “Everything else is status quo.”
Washington added to the sense of uncertainty by sending mixed signals on the proposal to cut $500 billion from the federal deficit over five years.
Federal Reserve Chairman Alan Greenspan’s praise for the budget accord gave the market an early boost, triggering hopes for an easing of interest rates. But White House and congressional leaders contradicted each other over the budget’s prospects for passage.
Underlying everything was the same queasiness about the economy that has pervaded trading since July. September car sales figures released Wednesday showed buying was still relatively strong, but GM shares were hard hit on a particularly weak sales report. GM fell 1 5/8 to 35 3/8, sinking the Dow.
Among other market highlights:
* Retailers were hit by a major selloff, led by Wal-Mart, which lost 1 3/4 to 27 3/4. Some analysts have been saying the stock is overpriced. Other major casualties included J.C. Penney, off 1 1/2 to 42 3/4; Sears, off 1 1/8 to 25 3/8; Home Depot, down 1 1/2 to 31 1/4; and Dillard Department Stores, down 5 to 75 1/4. A growing number of analysts fear consumer spending will soon dry up because of economic concerns.
* The high-tech sector also suffered big losses. Apple Computer dropped 2 5/8 to 27, or 9%, after announcing plans for lower-than-expected prices on three personal computers it is introducing this month. Also dragged down were Sun Microsystems, down 2 3/4 to 19 1/2; Autodesk, off 2 3/4 to 37; Sequent, down 1 3/4 to 14 1/4; and Intel, off 1 1/4 to 33 1/4.
* Bally Manufacturing tumbled 3/8 to 3 3/4 on continuing fears that the gambling firm is in financial trouble. Elsewhere, Golden Nugget fell 5/8 to 20 5/8 and Circus Circus lost 1 3/4 to 44 1/8.
* Continental Bank slipped 1/4 to 9 1/8 despite news that a group led by investor Laurence A. Tisch has raised its stake to 8.5% from 5.6%. Most financial stocks continued to slump. Ahmanson lost 7/8 to 13 3/4, Broad Inc. dropped 1/4 to 5, First Interstate fell 1 to 20 5/8 and Chase Manhattan lost 5/8 to 11 1/4.
In foreign trading, after a spectacular one-day jump of 2,676.55, or 13.24%, that breathed life into Tokyo’s bearish market, shares fell back slightly Wednesday, and some analysts said prices had yet to reach bottom.
The 225-issue Nikkei index fell 49.02 points, ending the day at 22,849.39 in moderate trading. At mid-morning today the Nikkei was off another 506.57 points.
Share prices closed higher on London’s exchange on speculation that the pound’s entry into Europe’s exchange rate mechanism was imminent. The Financial Times-Stock Exchange 100-share index closed up 28.5 points at 2,087.0.
The German market was closed for the unification day holiday.
CREDIT
Bonds Close Lower on Inflation Fears
Bond prices closed mostly lower as the surge in oil prices reignited fears about inflation and caused new concern that interest rates won’t fall much.
The closely watched 30-year Treasury bond fell 15/32 point, or about $4.68 per $1,000 face amount. Its yield, which moves inversely to the price, rose to 8.87% from 8.82% late Tuesday.
The federal funds rate, the interest banks charge one another for overnight loans, was quoted at 9%, up from 8.25% late Tuesday. However, technical aberrations often cloud rate trends on Wednesdays.
CURRENCY
Dollar Drops on All Major Markets
The dollar declined on world currency markets as traders continued to bet that U.S. interest rates are poised to move lower.
Still, Marc Chandler, an analyst at the consulting firm IDEA, noted that the dollar did not pierce “the bottom of a broad trading range.”
Trading was relatively light, which exacerbated the currency’s move downward.
The dollar finished at 1.542 German marks, down from Tuesday’s close of 1.549. Against the Japanese yen, the dollar ended at 136.04, down from 136.72 Tuesday.
Early today in Tokyo, the dollar fell to a record low of 1.538 German marks. It also fell to 135.88 yen.
COMMODITIES
Gold, Oil Futures Stage Sharp Gains
Gold futures prices rose sharply and oil futures soared in moves that analysts said were inspired more by technical factors than developments in the Persian Gulf.
On other commodity markets, copper futures rallied, and grains and soybeans were mostly higher.
Gold futures for October settled $4.80 higher on New York’s Commodity Exchange, at $393.90 an ounce. Gold had risen $2.50 on Tuesday. October silver rose 1.1 cents to $4.69 after gaining 3.9 cents on Tuesday.
