Dow Ends Off 4.70 After a Sharp Slide
Wall Street stocks recovered from sharp losses today to end mixed, as a plunge in oil prices gave the stock market a boost.
The Dow Jones average of 30 industrials, which climbed 122.77 points last week, slipped 4.70 to 2,516.09 after earlier trading down as much as 35 points.
Advancing issues outnumbered declines by about 8 to 7 on the New York Stock Exchange, with 838 up, 725 down and 429 unchanged.
Big Board volume totaled 152.65 million shares, against 221.48 million in the previous session.
The NYSE’s composite index rose 1.12 to 171.52.
Traders said the market came off its lows as oil prices plunged, good news for investors worried about interest rates and inflation. Crude oil on the futures market closed with a loss of more than $5 at $28.38 a barrel.
Bond prices moved moderately lower today amid pessimism about the government’s ability to resolve the budget morass.
The Treasury’s bellwether 30-year bond fell 1/4 point, or $2.50 per $1,000 in face amount, by midday. Its yield, which rises as the bond’s price falls, advanced to 8.77% from 8.75% late Friday.
Analysts said prices moved higher in early trading on reports that Iraq was withdrawing some troops from Kuwait. But as the reports went unconfirmed, traders began to sell bonds to take their profits, said Kevin Flanagan, a money market economist with Dean Witter Reynolds Inc.
Analysts said the market was concerned about the ability of Congress and the White House to reach a budget agreement. Over the weekend, White House Chief of Staff John H. Sununu walked out of meetings with congressional negotiators, although Budget Director Richard G. Darman did attend today’s early talks.
The Federal Reserve has made an easing of its monetary policy contingent on the passage of a budget agreement. Bond traders have been waiting for months for the Fed to relax credit and allow interest rates to fall.
Budget concerns more than offset a plunge in oil prices that might otherwise have boosted bonds today. Light, sweet crude tumbled $3.42 to $30.37 a barrel on the New York Mercantile Exchange by midday as investors grew more optimistic about a peaceful end to the Persian Gulf crisis.
In the secondary market for Treasury bonds, prices of short-term issues ranged from 1/32 point to 3/32 point lower, intermediate issues slipped by between 1/8 point and 5/32 point, and long-term issues were down as much as 7/32 point, according to Telerate Inc., a financial information service.
The movement of one point is equal to a change of $10 in the price of a bond with a $1,000 face value.
The Shearson Lehman Brothers daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.64 to 1,155.81.
Yields on three-month Treasury bills rose to 7.45% as the discount gained 1 basis point to 7.23%. Yields on six-month bills were unchanged at 7.54% as the discount remained at 7.18%. Yields on one-year bills rose to 7.53% as the discount advanced 2 basis points to 7.06%.
