Dow Dips on Computerized Selling : Market Overview
Stock prices fell modestly after traders deployed computerized sell programs in an Election Day session that was otherwise uneventful.
* Treasury bond yields were unchanged in light trading.
* The dollar was hit by profit-taking, falling overseas and ending mixed in choppy domestic trading.
Stocks
The market’s decline came a day after a rally based in part on analysts’ speculation that a Bill Clinton presidency wouldn’t be adverse to the financial markets.
The Dow Jones industrial average, which jumped 35.93 points in the previous session, closed down 9.73 points to 3,252.48.
In the broad market, declining issues outnumbered advances by about 5 to 4 on the New York Stock Exchange. Big Board volume was active, with 208.14 million shares changing hands, up from Monday’s 203.28 million.
Alfred Goldman, market strategist for A.G. Edwards & Sons Inc. in St. Louis, said market participants expressed relief that a decision was finally at hand in the race between Clinton, George Bush, and Ross Perot.
“If the market knows what devil they have to deal with, then it will be a lot more comfortable,” he said.
The market showed little change in early trading, but then prices headed lower in the afternoon after two waves of computer-driven selling hit stocks, said Dennis Jarrett, market analyst for Kidder, Peabody & Co.
Analysts dismissed as old news the latest Commerce Department report on the index of leading economic indicators, released Tuesday. The government’s chief economic forecasting gauge fell 0.3% in September, a sign that the economy will remain sluggish for the next several months.
Among the market highlights:
* Oil stocks took the brunt of the day’s selling after several brokerage houses downgraded prominent companies because of weak demand and the recent decline in oil prices. Atlantic Richfield Co. fell 2 7/8 at 113 1/8; Amoco, down 1 7/8 at 50 1/4; Exxon, down 3/4 at 59 1/2, and Texaco, off 1 3/8 at 58 3/4.
* General Motors was the most actively traded issue on the New York Stock Exchange, up 1/2 at 32 3/8. That comes a day after the auto maker cut its dividend in half and announced sweeping management changes.
* Other active issues on the NYSE included RJR Nabisco, up 1/8 at 8 3/4; Phillip Morris, down 1/4 at 76 3/4; International Business Machines, up 1/4 at 69 1/8, and Chrysler, down 1/4 at 27 1/4.
* General Dynamics was down 1 7/8 at 101 1/8 after the Wall Street Journal reported that the huge defense contractor was prepared to sell its core holdings as the military complex winds down following the Cold War.
* Berlitz International slumped 2 5/8 to 19 5/8 after the company said that third-quarter earnings fell 76% and that its tentative merger partner, Fukutake Publishing, wants to renegotiate the deal.
* Burlington Industrial Equity Inc. fell 2 3/4 to 11 1/2.
Overseas, share prices rose slightly on the London stock exchange in cautious trading. At the close, the broad-based Financial Times 100-share average was up 17.8 points at 2,705.6.
In Frankfurt, stocks made solid gains, aided by a rise in the dollar against the mark. The 30-share DAX average closed 12.43 points higher at 1,485.
The Tokyo market was closed for a public holiday.
Credit
The yield on the Treasury’s key 30-year bond was 7.66%, unchanged from late Monday, while it’s price gained 1/16 point, or 63 cents per $1,000 in face amount.
Richard Berg, a senior vice president at Clayton Brown & Associates in Chicago, said trading occurred “on real thin volume. There’s not enough volume to make any conclusions on it.”
Berg doubted a Clinton victory would have an effect on the market today.
“The market has priced in a Democratic President and I’m not sure that the market will sell off that much (if Clinton is the winner). I think all the bad news has been priced in.”
Traders have been fearful a President Clinton would raise government spending, boosting the deficit and pushing up interest rates.
The federal funds rate, the interest on overnight loans between banks, was quoted at 3.125%, unchanged from late Monday.
Currency
Analysts said traders were bent on locking in profits following the dollar’s run-up in recent weeks. Trading was choppy.
“People want to see what the election results hold,” said Randolph Donney, research director at Pegasus Econometric Group in Hoboken, N.J. “Then we can go back where we were as long as Clinton is elected.”
The market essentially failed to react to the reported drop in the index of leading indicators.
In New York, the dollar settled at 122.40 Japanese yen, down sharply from 123.60 yen on Monday. The greenback rose to 1.568 German marks, up from Monday’s 1.566. The British pound rose to $1.551 from $1.534.
Commodities
Cotton futures prices surged on New York’s Cotton Exchange after the U.S. agricultural attache in Beijing lowered his estimate of the size of China’s cotton crop.
On other markets, grains were lower, soybeans higher, cattle was lower, pork higher, precious metals were lower and energy futures were mixed.
Cotton for delivery in December settled 2 cents higher at 54.93 cents a pound.
Precious metal futures fell on New York’s Commodity Exchange, with gold losing $2.40 to close at $337.50 an ounce. Silver lost 1 cent, finishing at $3.782 an ounce.
On the New York Mercantile Exchange, December light sweet crude was 7 cents lower at $20.70 a barrel.
Market Roundup, D6
