Dow Goes From + to -8.66 on Choppy Trading Day
Stocks sagged slightly today after spending much of the day on the plus side. Choppy, cautious trading greeted the latest set of economic data and the Federal Reserve chairman acknowledged the economy had entered a “meaningful downturn.”
The Dow Jones average of 30 industrials fell 8.66 points to 2,535.15.
Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, with 837 up, 656 down and 501 unchanged.
Big Board volume totaled 145.49 million shares, against 147.59 million in the previous session.
The NYSE’s composite index rose .04 to 173.91.
Analysts said some investors were optimistic early in the day that interest rates could be heading lower following the government’s release today of new economic data and testimony by Federal Reserve Chairman Alan Greenspan before the House Banking Committee.
Hugh Johnson, senior vice president for First Albany Corp., said Greenspan’s comments--all but declaring the nation in a recession--were encouraging as far as the interest rate outlook was concerned.
But he also noted the Fed has given no clear indication that it intends to aggressively lower rates to jump-start the economy in the near term.
“The Fed is going to be characteristically very measured ... in changing monetary policy,” Johnson said.
In the morning, traders were also encouraged by the price of crude oil, which slipped 29 cents to $32.57 a barrel for January delivery on the New York Mercantile Exchange.
The dollar was also higher against most major currencies.
Jack Solomon, technical analyst at Bear Stearns, said the stock market may be experiencing an early year-end rally.
“Some people fear they’ll miss out,” he said.
Among actively traded issues, Texas Instruments was up 1 3/8 at 32 1/4 one hour before the close, General Motors was up 3/8 at 37 3/4 and Philip Morris was up 1/8 at 49. Pepsi Co. was down 1/2 at 25 1/2. The Limited was unchanged at 14 7/8 and C.S. Sovran was up 3/8 at 17 1/4.
Bond prices were down slightly in early trading today, but rebounded from earlier lows on indications that the economy is in recession.
The Treasury’s bellwether 30-year bond eased 1/32 point, or 31 cents per $1,000 in face amount, around midday. Its yield was down to 8.43% from 8.44% late Tuesday.
Bond-market strategists said the credit markets initially were dragged down by a government report that showed unexpectedly strong demand for durable goods in October.
But the market rebounded on Greenspan’s comments, which traders took to mean the Fed may move to ease interest rates again.
By late morning in the secondary market for Treasury bonds, short-term maturities were down by between 3/32 point and 5/32 point, intermediate maturities were down 3/32 point and long-term issues were down 1/32 point to 1/16 point, the Telerate Inc. financial information service reported.
