7.83-Point Fall Is the Dow’s 6th Drop in a Row
Market Overview
Highlights of Tuesday’s market activity, compiled from Times staff and wire reports:
* Concern about the outlook for corporate earnings, especially International Business Machines and other blue chips, sent blue chip stock prices lower for a sixth straight day.
* The Dow Jones average ended 7.83 points lower at 2,863.82.
* The dollar rose in active trading. Swirling instability in the Soviet Union sent investors rushing to the U.S. currency as a haven.
Stocks
The 30-stock index was off more than 19 points early in the day, following steep losses in pace setters IBM and General Motors Corp.
A rebound by the two blue chips then relieved pressure on the market, analysts said. IBM rose 1 1/8 to 86 1/4, and GM gained 7/8 to 28 1/2.
In the broader market, declining issues outnumbered advances by 8 to 5 on the New York Stock Exchange. Big Board volume was an active 192.92 million shares, up from Monday’s 174.76 million.
“The market is rather cautious to a little bit scared,” MKI Securities manager Dick Stein said. “There is no conviction for anything on the upside.”
Analysts said hopes for a year-end rally were fading.
“I keep waiting for a year-end rally, and we seem to be running out of time,” said Ned Collins at Daiwa Securities.
Analysts said comments by President Bush had not soothed investor concern over the sluggish economy.
In a visit to the trading pits of the Chicago Board of Trade, Bush said the economy’s performance was unacceptable and pledged to work with Democrats who control Congress to turn it around.
Among the market highlights:
* Deere & Co. dropped 4 1/4 to 43 after the nation’s largest farm equipment maker reported a loss in its fourth quarter and predicted poor results in the first quarter.
* Tenneco, which has a farm equipment unit, lost 1 1/2 to 31 in sympathy with Deere.
* Whirlpool rose 1 3/8 to 32 3/8. Dean Witter reaffirmed its buy-hold rating but cut its 1991 and 1992 profit estimates.
* USX-Marathon Group dropped 1/2 to 23 1/4 on speculation that the next test results at the company’s oil field in Tunisia will be disappointing.
* The parent of the Los Angeles Times, Times Mirror Co., fell 1/8 to 26 7/8 after predicting improved operating earnings in 1992 despite forecasts for a slow economic recovery.
* Novell rose 3 to 56 1/4 after it reported stronger-than-expected fourth-quarter results.
* W. R. Grace lost 1 7/8 to 35 7/8. C. J. Lawrence cut its rating and estimates on the company.
* Sun Microsystems added 3 to 24 1/4 after the company told analysts that it was pleased with its second-quarter results.
* Varian Associates slumped 2 5/8 to 34. Paine Webber cut its earnings estimates and rating on the company.
* Borland International, which recently hit a new high, dropped 3 3/4 to 75.
* UAL Corp., which owns United Airlines, was up 2 1/2 at 119 1/4 after it emerged as the successful bidder for the Latin American routes of the failed Pan American World Airways.
The NASDAQ over-the-counter index was down 1.12 to 534.23.
Overseas, Tokyo stocks dropped sharply on arbitrage selling. The 225-share Nikkei average fell 399.82 points to 21,953.06.
Share prices slipped on the London Stock Exchange, with the Financial Times 100-share average losing 17.6 points to 2392.0.
In Frankfurt, the 30-share DAX average closed off 7.94 points at 1,551.11.
Credit
Treasury bond prices closed little changed after a session in which the market received mixed signals.
The price of the 30-year bond fell 1/32 point, or 31 cents per $1,000 in face amount. Its yield, which moves in the opposite direction from price, rose to 7.79% from 7.78% Monday.
The federal funds rate, the interest on overnight loans between banks, remained at 4.25%.
Currency
Foreign exchange dealers said the news out of the Soviet Union dominated the currency market, particularly the uncertainty over whether President Mikhail S. Gorbachev would resign in view of his fading authority.
“Basically, the dollar did move somewhat higher today on renewed fears of the political situation in the Soviet Union and rumors Gorbachev would resign,” said Carl Forcheski, a foreign exchange trader at Chemical Bank in New York. “With the split-up of the Soviet Union, who’s in charge over there and what’s happening with the military arsenal are big questions.”
The dollar brought 1.579 German marks in New York, up from 1.571 Monday. It rose to 128.75 Japanese yen from 128.27. The British pound fell to $1.809 from $1.813.
Commodities
Most grain and soybean futures prices weakened on the Chicago Board of Trade in cautious trading ahead of a government supply-and-demand report.
On other commodity markets, most energy futures rallied, livestock and meat futures fell, and precious metals retreated.
Petroleum futures ended mostly higher on the New York Mercantile Exchange, with traders believing that some of the recent steep losses were an overreaction. Among energy futures, only January crude oil closed lower. It slipped 1 cent to $19.41 a barrel, a new eight-month low.
Meanwhile, December gold eased 40 cents to $368.90 an ounce on New York’s Commodity Exchange. December silver dropped 3.3 cents to $3.978 an ounce.
Market Roundup, D6
