Dow Declines 29.96 on New Recession Fears : Market Overview
* Stocks ended the week sharply lower, hounded by signs that the economy could relapse into recession and by fears of a replay of Wall Street’s fast-paced decline the week before. The Dow Jones average of 30 industrials fell 29.96 to 2,902.73.
* Treasury bond prices were down slightly to unchanged in quiet trading as investors awaited economic figures from the government next week.
Stocks
Analysts said futures-related selling also depressed the stock market, which lacked buyers. Many jittery investors cleaned out their books ahead of the weekend to guard against surprise developments.
For the week, the Dow average lost 40.47 points after the dramatic 120-point drop Nov. 15. The Dow’s plunge continued to reverberate through the market. Traders and analysts said there was nothing specific to cause stocks’ broad decline. They attributed the selling to a general malaise among market participants.
On the New York Stock Exchange, declining issues outnumbered advances 7 to 3. Volume on the floor of the Big Board came to 188.26 million shares, down from Thursday’s 196.18 million.
“Obviously there hasn’t been much interest on the buy-side,” said MMS International analyst Jim Schroeder. “People are uncertain. When there are rumors and they affect the market, it’s an indication that people are skittish.”
“It may be the situation where people are a little nervous going into the weekend,” said Bradley Turner, chairman of McDonald & Co.’s investment policy committee.
“With each passing day,” he said, “we get closer to the 1992 election. I think the President and Administration are under a great deal of pressure to get their agenda together.”
A proposal from lawmakers to cap credit card rates--which was partly blamed for last Friday’s shakeout--was poorly received by the stock market.
Among market highlights:
* Grocery store chain Stop & Shop topped the NYSE actives list with volume of more than 5 million shares. The new issue was priced at 12 1/2.
* Bristol-Myers Squibb fell 1 1/2 to 80 1/4. A Smith Barney analyst cut her 1992 earnings forecast for the drug maker in anticipation of a more competitive pharmaceutical pricing environment next year.
* Lotus Development fell 3/4 to 21 1/4. The Cambridge, Mass.-based software maker linked the drop to the resignation of a key executive.
* Sanford, the manufacturer of office and school supplies, jumped 10 1/2 to 35 3/4. It agreed to merge with Newell, a consumer products company, in a share-for-share pact. Newell lost 2 to 39 3/8.
* Autodesk gained 1 1/8 to 31. Dean Witter Reynolds raised its rating on the software maker to a hold from a swap recommendation after the stock reached an analyst’s downside price target.
* McDonnell Douglas rose 1 7/8 to 72 3/4. A Paine Webber analyst upgraded his rating on the company to neutral from unattractive.
* Instituform of North America rose 1 3/4 to 17 7/8. Dean Witter added the sewer pipeline repair company to its buy list.
The NASDAQ over-the-counter index was down 3.87 to 526.46.
Prices fell on London’s Stock Exchange amid concern over the weakness of the pound. The Financial Times 100-stock average dropped 17.2 points to 2,446.3.
Stocks fell for the eighth day in a row in Tokyo’s longest losing streak in five years. The 225-share Nikkei average lost 60.45 points to 23,117.39.
In Frankfurt, the 30-share DAX average rose 2.16 to 1,600.26.
Credit
After a week of bouncing around on worries that politicians trying to stoke the economy might overdo it and stoke inflation, the bond market seemed to take a rest.
The price of the Treasury’s bellwether 30-year bond fell 1/16 point, or 63 cents per $1,000 in face amount. Its yield, which rises when the price falls, rose slightly to 7.98% from 7.97% Thursday.
“Everybody seemed willing to sit back and wait,” said Carol Stone, senior economist at Nomura Securities International Inc.
Economic reports due out next week include existing-home sales, durable goods and personal income for October.
The federal funds rate, the interest on overnight loans between banks, rose to 4.75% from 4.625% Thursday.
Currency
The steep fall in stock prices led traders to sell the dollar, pushing it down against major foreign currencies.
In New York, the dollar closed at 1.584 German marks, down from 1.599 Thursday. It suffered less damage against the Japanese yen, ending at 129.40 against 129.60 Thursday.
Other dollar rates in New York, compared to Thursday, included: 1.409 Swiss francs, down from 1.422; 5.414 French francs, down from 5.461; 1,199.50 Italian lire, down from 1,208.00, and 1.139 Canadian dollars, up from 1.137.
Commodities
Crude oil futures prices plunged to a four-month low on the New York Mercantile Exchange as rumors about Iraqi sales fueled a big selloff.
Other petroleum futures also fell sharply, pressured in part by unseasonably warm weather that has cut into demand for heating oil.
On other commodity markets, cotton futures plunged, livestock and meat futures were mixed, grains and soybeans were mixed and precious metals rose.
Light, sweet crude for January delivery dropped 57 cents to $21.21 a barrel, December wholesale heating oil plunged 1.50 cents to 62.06 cents a gallon, December wholesale unleaded gasoline fell 1.36 cents to 62.48 cents a gallon and January natural gas fell 0.3 cent to $2.086 per 1,000 cubic feet.
Traders said they believe that OPEC members will agree to keep the taps open at their meeting next week. With it inevitable that Iraqi crude sales will resume and demand for oil expected to fall next spring, the market senses a glut in the making, analysts said.
Meanwhile, precious metals rose on New York’s Commodity Exchange in a modest follow-through to Thursday’s strong rally.
December gold rose $1 to $369.60 an ounce; December silver rose 1 cent to $4.135 an ounce.
