STOCKS : Dow Slides 15.84 on Recession Worries
Blue chip stocks fell Monday for the third straight session, pressured by Wall Street’s worries about the economy and interest rates.
The Dow Jones industrial average closed down 15.84 points at 2,939.36.
In the broader market, declining issues outnumbered advances by about 7 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 649 up, 935 down and 467 unchanged. Technology stocks--which have been high fliers of late--bore the brunt of Monday’s declines.
Volume on the New York Stock Exchange was a moderate 161.6 million shares, down from 206.9 million Friday.
Investors are taking a closer look at the economy and are concerned about the depth of the recession.
“Right now, people are having a hard time getting a handle on the economy,” said Ron Hill, an investment strategist at Brown Bros. Harriman. “People are pausing right here.”
He also said the 3,000 mark on the Dow average of 30 industrials represented “a psychological barrier for a lot of people.”
The blue chip barometer has been pulling back ever since it briefly breached--but failed to finish above--the 3,000 level last Wednesday.
The Federal Reserve’s move Friday to cut the federal funds rate--the overnight rate at which banks lend one another money--provided little support to stocks Monday.
“There’s quite a bit of talk about a cut in the discount rate. But on the other side, some people think the recent easing in the federal funds rate indicates the approaching end of the Fed’s easing,” said Peter Davies, a vice president at Nomura Securities.
Among the market highlights:
* The NASDAQ composite index of smaller stocks dropped 7.96 points, or 1.7%, to 467.15 in the first major sign of profit taking among small stocks since their major rally began in mid-January. Technology issues helped fuel the decline.
* Tech stocks were led lower by Intel, which slumped 5 3/4 to 45 3/4 after Merrill Lynch lowered its rating on the semiconductor giant to neutral from buy. Merrill cited concerns about the “growing saturation” of the personal computer market, a major market for Intel’s chips.
Other tech losers included Apple Computer, down 1 1/2 to 63 1/2; Compaq, off 2 7/8 to 67 5/8; IBM, down 2 1/8 to 129 1/8; Motorola, off 2 3/8 to 61 3/4, and AST Research, which lost 1 7/8 to 26.
* There was substantial churning within the Dow index. GE jumped 1 5/8 to 68 3/8 and Merck gained 1 1/8 to 106 3/4, while Procter & Gamble lost 2 to 85 and Texaco fell 1 1/8 to 63 5/8.
* Chrysler added 1/4 to 14 3/4. A report in the Sunday Times of London said a takeover of the company by a foreign buyer is likely if the federal government declines to object. The report named Peugeot, Fiat and Honda as potential bidders.
* CBS tumbled 12 3/8 to 169 1/2 after analysts at Wertheim Schroder and Paine Webber made negative comments. The comments were apparently related to expectations of a Federal Communications Commission ruling against the networks--and in favor of studios--on the thorny question of TV rerun profits. Cap Cities/ABC shares dropped 12 to 468.
* LA Gear jumped 1 3/4 to 14. The company had no comment on a possible reason for the surge.
* Gap Inc. dropped 2 5/8 to 46 7/8. The retailer confirmed that its chairman sold about 1 million shares in the open market. The stake amounted to less than 6% of his holdings.
* Among Southland stocks, Tokos Medical tumbled as low as 17 1/2 after reporting a fourth-quarter loss, but rebounded to close at 19 1/4, off just 1/4.
IDB Communications fell 5/8 to 8 1/2. After the close, the satellite communications company said fourth-quarter earnings were 10 cents a share, up from six cents a year ago.
Small stocks hit by profit taking included Agouron Pharmaceuticals, off 1 1/2 to 7 3/4; American Ecology, down 5/8 to 8 3/4; K Swiss, off 1 1/2 to 22 1/2, and Birtcher Medical, down 1/2 to 12.
In foreign trading, German shares tumbled 2.3% from Friday’s strong closing levels. The 30-share DAX average ended 36.51 points lower at 1,565.78.
In Tokyo, stocks ended firmer after the Federal Reserve’s apparent credit easing revived hopes that Japan’s central bank would follow suit. The key 225-share Nikkei average ended up 61.85 points at 26,669.37.
Shares also closed slightly higher on London’s Stock Exchange, but well off their session peaks. The Financial Times 100-share average rose 4.1 points to close at 2,459.1.
Credit
Bond prices rose sharply in light trading, buoyed by a strong dollar and a re-evaluation of last month’s unemployment figures.
The Treasury’s benchmark 30-year bond was up 15/16 point, or $9.38 per $1,000 in face amount. Its yield, which falls when prices rise, slid to 8.22% from late Friday’s 8.30%.
The dollar’s continued strength against major European currencies drove bond prices higher, several traders said.
The appetite for dollars shows that foreign investors are comfortable with the U.S. market, and Treasuries are expected to benefit as a result, said Wayne Lyski of Alliance Capital Management Corp.
The federal funds rate was quoted at 6 1/16%, up from 6% late Friday. Most traders believe that the Fed acted Friday to ease the funds rate a quarter percentage point in reaction to the unemployment report.
Commodities
Precious metals futures prices fell on New York’s Commodity Exchange as the market responded to the strengthening dollar and declining crude oil prices.
On other markets, grain and soybean futures fell, livestock and pork futures retreated, energy futures were lower and copper dropped.
Silver prices retreated sharply in what traders called a technical correction after advancing about 70 cents from the 18-year low that was recorded after the end of the Persian Gulf War.
Silver prices had advanced in recent weeks, based partly on speculation that the end of the war would speed a U.S. economic recovery and boost industrial demand.
Analysts said a correction in silver prices was expected after recent gains.
Bette Raptopoulos, an analyst with Prudential Securities Inc. in New York, said gold futures fell as the dollar strengthened and crude oil prices eased.
Gold settled $5 to $5.20 lower, with the contract for delivery in April at $366.20 an ounce; silver was 9.5 to 11.1 cents lower, with March at $4.070 an ounce.
Market Roundup, D8
