Dow Dives 24 on Computer-Driven Sales : Market Overview
* A late, computer-driven plunge in the blue chips shook Wall Street out of a daylong case of the doldrums, but the broader stock market held firm.
* The Dow Jones average of 30 industrials fell 24.15 points, to 3,324.46, although declining issues barely outnumbered advancers on the New York Stock Exchange.
* Treasury bond prices were slightly higher in quiet dealings.
Stocks
Stocks had opened with a mild rally, as recently battered health care issues found some strong buying interest.
But the rally soon fizzled and stocks bounced around uncertainly until the bottom fell out late in the session. Traders found no news to motivate any broad market trends.
Some traders were taken aback by the Dow’s sudden dive, but they noted the selloff didn’t gather momentum elsewhere.
“We’re really working up a perspiration to stand still,” said Jack Solomon, who follows stocks for Bear, Stearns & Co. “There is nothing substantive because there was nothing coming out late in the day.”
Still, he called the drop “vicious.”
Others said the plunge followed Chicago futures trading on stock market barometers and provided evidence of the problems one can face by trying to use the Dow as a barometer for the entire stock market.
Big Board volume totaled 199.31 million shares, against 237.94 million on the New York Stock Exchange.
In the broader market, losing issues outnumbered gainers by 875 to 804 on the NYSE. After a week of jagged trading, the Dow ended the week down 42.04 points.
A drop in General Motors shares exerted early pressure on the market. “GM kind of set the tone for us,” said Alice Sadlo, a first vice president at McDonald & Co. “It weighed heavily on us this morning.”
* GM lost 2 3/4 to 39 5/8. The company announced that it plans to sell 50 million shares of common stock in a global offering valued initially at $2.1 billion. The offering will dilute earnings per share by about 8%.
* After being battered earlier this week, some drug stocks showed tentative signs of a comeback. Johnson & Johnson rose 1 1/4 to 92 1/8, Merck & Co. rose 3/4 to 140 1/2, and Eli Lilly gained 5/8 to 68 3/8.
In other individual issues:
* Black & Decker topped the Big Board activity list, gaining 3/4 to 24. It began an offering of 18 million shares of its common stock at $23.25 a share.
* Chiquita Brands slumped 4 1/4 to 20 3/8 after it reported first-quarter results that were sharply below analysts’ expectations. Analysts cut ratings or estimates.
* Network Systems lost 3 1/8 to 9 5/8. It reported disappointing first-quarter profits. Merrill Lynch lowered its rating and earnings estimates.
* Paramount Communications lost 1 1/2 to 45 1/2 after Salomon Bros. traded a 2.78 million-share block.
* Bank of Boston added 1 1/2 to 22. PaineWebber upgraded its rating and raised earnings estimates.
* Sam & Libby slumped 3 to 7. It expects earnings for the full year to be below results in 1991.
Overseas, the Tokyo stock exchange’s main index rose for the third straight day, driven by a rumor of moves by financial authorities to support the market, traders said. The 225-issue Nikkei average rose 140.40 points closing at 17,542.45.
Share prices closed higher Friday on London’s stock exchange. At the close, the Financial Times 100-share average was up 33.2 points at 2,643.0.
In Frankfurt, shares ended easier with the 30-share DAX index closing 6.74 points down at 1,745.70, a fall of 3.53 points on the week.
Credit
The Treasury’s main 30-year bond closed up 3/32 point, or 94 cents per $1,000 in face amount, while its yield held at 8.04%.
Intermediate-term securities rose more sharply thanks to surprising buying interest in five-year Treasury notes sold at auction Thursday. Market participants had been concerned that oversupplies from coming government securities auctions might drive down bond prices.
That along with a series of economic reports due out next week made many traders reluctant to make any moves on Friday. The federal funds rate, the interest on overnight loans between banks, was quoted at 3.675%, same as late Thursday.
Currency
The dollar moved lower as traders predicted few substantial developments would emerge from this weekend’s meeting of finance ministers from the seven major industrial nations.
Jay Tucker, currency trader for First Boston Corp., said many analysts had few expectations from the scheduled Group of Seven meeting in Washington. Analysts believe that Germany will resist U.S. pressure to cut its interest rates.
In New York, the dollar fell to 1.650 German marks, down from 1.661 late Thursday. The dollar closed at 134.45 Japanese yen, down from 134.65 at Thursday’s close.
The British pound closed at $1.775, down from Thursday’s $1.766.
Commodities
Soybean futures prices dropped sharply and wheat futures surged on the Chicago Board of Trade in trading that analysts attributed to speculative commodity funds.
In other grain trading in Chicago, corn futures fell moderately, and oats were mixed. On other commodity markets, livestock and meat futures rose; oil futures advanced, and precious metals fell.
Soybeans for May delivery fell 6.50 cents to $5.75 a bushel, erasing a 6.25-cents gain that the May contract had run up through the four previous sessions.
Meanwhile, crude oil futures rose modestly on the New York Mercantile Exchange on technical factors as traders ignored news that OPEC nations had agreed to keep their oil production ceiling steady in the spring.
Light, sweet crude oil for June delivery rose 11 cents to $20.22 a barrel, and May heating oil fell 0.12 cent to 55.29 cents a gallon.
Precious metal futures retreated on New York’s Commodity Exchange with gold falling $1.80 to $336.90 an ounce and silver dropping 4.8 cents to $4.965 an ounce.
