STOCKS : Dow Off 37.87; Fretting About Economy Cited
The losses piled up on Wall Street Monday as euphoria over last week’s historic rally faded and investors began taking a closer look at the health of the economy.
The Dow Jones industrial average dropped 37.87 points to 2,927.72, a 1.3% loss. Among smaller stocks, the NASDAQ composite index fell 1.4%, losing 6.81 points to 494.38.
Declining issues outnumbered advances 1,248 to 444 in nationwide trading of New York Stock Exchange-listed stocks.
But the selloff came on slow volume: Just 164.40 million shares traded on the Big Board, versus 195.51 million Friday.
Traders said investors increasingly are looking at signs of a still-slow economy, combined with the Federal Reserve’s reluctance to cut interest rates further, and are concluding that stocks may have run out of steam for now.
The Dow now has lost 76.74 points, or 2.6%, from its peak of 3,004.46 reached last Wednesday.
Though the slowing volume shows that there is no stampede to sell, bargain hunters seem to be trying to pull prices a bit lower before stepping in, traders said.
Among the market highlights:
* Health-care stocks, which have been among the market’s leaders all year, were hit hard by profit taking. Schering-Plough fell 1 5/8 to 47 1/2; Bristol-Myers dropped 1 5/8 to 76 1/2;, Salick Health gave up 1 1/4 to 11 1/2, and U.S. Surgical lost 2 5/8 to 120 1/4. Orange-based Bergen Brunswig, a medical products distributor, slumped 2 1/2 to 27 3/4 after brokerage Raymond James took the stock off its “buy” list.
Warner-Lambert tumbled 3 3/8 to 75. A medical study said that people who use mouthwashes containing more than 25% alcohol have a greater risk of mouth and throat cancer. Warner insisted its Listerine mouthwash is safe, but also said it is in the process of reformulating the product.
* In biotech, Amgen soared 4 1/2 to 132 after a Shearson Lehman analyst made positive comments about the company. At the same time, the analyst downgraded Amgen competitor Genetics Institute, causing it to plummet 7 5/8 to 29.
* American Express fell 7/8 to 27 1/8 after warning of slower earnings growth ahead because of the weak economy. L.A.-based electronics distributor Bell Industries lost 1/8 to 10 7/8 after reporting quarterly earnings off 81%.
* Golden Valley Microwave surged 7 5/8 to 24 1/2. It agreed to be acquired by ConAgra in a stock-swap valued at nearly $500 million. ConAgra lost 1 3/8 to 45 1/8.
* NCNB fell 2 3/8 to 37 on fears that shareholder value will be diluted if the banking firm sells 10 million new shares, as expected.
* Agoura Hills-based hazardous-waste disposal firm American Ecology soared 1 3/4 to 10 1/2. The company had no explanation.
Overseas, stocks fell broadly before Wall Street’s opening.
Japan’s Nikkei average lost 304.96 points to 26,237.01. In London, the Financial Times 100-share average dropped 29.3 points, or 1.2%, to 2,490.8. Germany’s 30-share DAX average slumped 27.54 points to 1,571.91.
Credit
Bond yields rose again on concern about a possible oversupply of new issues, and belief the Federal Reserve won’t ease credit further.
The Treasury’s 30-year bond declined 17/32 point, or $5.31 per $1,000 in face amount. Its yield rose to 8.29% from 8.24% Friday.
Trading was extremely light. “In the absence of any positive news, the market wants to sell off,” figuring interest-rate declines are over, said Steven Wood, economist at BankAmerica Capital Markets.
Traders also are concerned the market may have trouble absorbing $12 billion in two-year T-notes and $9 billion in five-year notes to be sold today and Wednesday.
The federal funds rate, the rate on overnight loans between banks, was 6%, up from 5.675% Friday.
Currency
The dollar continued to rocket against other currencies on expectations that U.S. interest rates will stay stable and that Europe’s economic weakness will linger.
The dollar dipped briefly in the afternoon after a rumor that President Bush had a heart attack. The White House denied the report.
In New York, the dollar ended at 1.765 German marks--its highest level since December, 1989. It was at 1.736 Friday.
The dollar also closed at 139.49 Japanese yen, from 138.35 Friday.
The dollar’s huge move against the mark came on news that German Chancellor Helmut Kohl lost a key election in his native state of Rhineland. “It is more deutschemark-negative news rather than dollar-positive,” argued trader Carl Amendola at Hypobank. But he also said, “It’s tough to go against the dollar right now.”
Commodities
Energy futures jumped on the New York Merc, led by gains in heating oil, on reports of record cold weather in some southern European nations.
Light sweet crude futures settled 11 to 49 cents higher, with May at $21.62 a barrel.
On New York’s Comex, gold settled 60 cents to $1.20 higher, with April at $357.90 an ounce. Silver rose 2.6 cents to $3.93.
Market Roundup, D6
