Election Jitters Knock Dow Down 19.99 : Market Overview

* Investors circled their wagons in preparation for Tuesday’s election, pulling stock prices lower. The market was also pressured by unexpectedly soft economic data.

* Treasury bond yields rose after the government revised its figure for sales of new homes in August to show a gain and also reported better than expected sales in September.

Stocks

Two new opinion polls showing President Bush in a near dead heat with Gov. Bill Clinton only served to heighten the markets pre-election anxiety.

The Dow Jones average finished down 19.99 points at 3,226.28. In the broader market, declining issues slightly outnumbered those advancing on the New York Stock Exchange. Big Board volume retreated to 201.93 million from 206.55 million on Thursday.

The Dow gained 18.64 points for the week.

The market has virtually discounted a Clinton win. While individual stocks showed reactions to specific news items, analysts noted few trends.

“People don’t want to make any major moves,” said Steve Poling, an executive vice president at Fortis Advisers Inc.

A Newsweek poll showed Clinton leading Bush by 2 percentage points, and the latest CNN/USA Today presidential preference tracking poll found the Arkansas governor barely ahead at 41% to Bush’s 40%.

“The market doesn’t like uncertainty, and this is becoming more uncertain,” Poling said.

Economic data continued to show weakness. The University of Michigan survey showed consumer confidence falling. The Chicago Purchasing Managers report fell to 49.7% in October from 59.6%. The Commerce Department said sales of new homes in September fell 1%.

Among the market highlights:

* CMAC Investment led Friday’s list of volume leaders, trading at 19. An offering of 9.65 million CMAC shares by parent company Reliance Group Holdings and another Reliance subsidiary took place at $18 a share.

* Losers among the blue chips included Philip Morris, down 1 3/8 to 76; General Motors, down 5/8 to 30 3/4; General Electric, down 3/4 to 76 3/4, and Minnesota Mining & Manufacturing, down 1/2 to 102 7/8.

* But the biggest contributors to the Dow’s loss were energy stocks. Chevron dropped 2 to 71; Texaco 1 3/8 to 60, and Exxon 7/8 to 61 1/4 as oil prices extended their recent decline.

* Sara Lee gained 7/8 to 60, touching a new high. On Thursday, the company’s directors declared a 2-for-1 stock split and a 16% increase in the cash dividend.

* Aetna Life & Casualty was actively traded, unchanged at 42 1/8 after trading fractionally higher for most of the session. The company posted third-quarter earnings from continuing operations of $1.15 a share, up from 67 cents a share in the like period last year.

* Curaflex Health slumped 3 to 5 1/2 after it reported third-quarter profit that was under analysts’ expectations. Smith Barney cut its rating and Morgan Stanley lowered estimates.

* Cooper Industries continued to fall after its disappointing earnings Thursday. Donaldson, Lufkin Jenrette, Kidder Peabody and Lehman Bros. all cut their ratings. It lost 3/8 to 45 7/8.

Overseas, London shares finished higher with the Financial Times 100-share averages rising 16 points to close at 2,658.3.

Stocks ended lower in Tokyo on futures-linked selling. The 225-share Nikkei average fell 170.31 points, or 1%, to 16,767.40.

Frankfurt’s 30-share blue chip DAX average slipped 1.32 points to 1,492.32.

Credit

The better than expected new home sales figures, along with an upcoming quarterly auction of new bonds and uncertainty of how the market will react to the presidential election, have left many unwilling to buy bonds.

The yield on the Treasury’s main 30-year bond rose to 7.62%, up from 7.57% late Thursday.

The price, which falls when yields rise, fell 17/32 point, or $5.31 per $1,000 in face amount. Its yield, which rises when prices fall, was 7.62%, up from 7.57% late Thursday.

Also, the uncertainty surrounding what a Clinton victory would mean for the federal budget and the economy has many investors taking a cautious approach toward bonds. The market sold off earlier this month amid concerns over a Clinton victory.

Finally, investors are concerned about next week’s announcement of how much in new bonds the Treasury will sell at its quarterly auction, said Sung Won Sohn, chief economist at Norwest Corp. in Minneapolis.

In the tax-exempt market, the bond buyer index of 40 actively traded municipal bonds closed at 93.75%, up 6/32 point. The average yield to maturity fell to 6.68% from 6.70% late Thursday.

Currency

The dollar settled mostly higher in quiet trading on world currency markets Friday.

The dollar advanced in European trading and continued to build on those gains when activity shifted to domestic markets.

Meanwhile, the prospect of lower interest rates in Europe prevented the dollar from falling. The overall sentiment toward the U.S. currency remains bullish, analysts said.

In New York the dollar closed at 123.40 Japanese yen, up from 123.28 yen on Thursday. The greenback also rose to 1.542 German marks, up from 1.538 marks.

The British pound fell to $1.557 from Thursday’s $1.573.

Commodities

Soybean futures surged on the Chicago Board of Trade on news of increased export sales and the prospects of a breakthrough in the U.S.-European trade talks.

On other markets, coffee surged, energy was mixed, precious metals retreated, and livestock and meats were higher.

Meanwhile, precious metals futures registered small losses in quiet trading on New York’s Commodity Exchange. December gold settled 10 cents lower at $339.40 an ounce; December silver was 0.3 cent lower at $3.762 an ounce.

Crude oil continued its slide on the New York Mercantile Exchange with December light, sweet crude oil falling 9 cents to $20.62 a barrel.

Market Roundup, D6