FINANCIAL MARKETS : Dow Down Amid Heavy Trading; Dollar Rises
Market Overview
Highlights of Friday’s market activity, compiled from Times staff and wire reports:
* Stocks slumped in a session marked by heavy trading volume tied to the quarterly expiration of options and futures.
* The dollar rocketed against the mark and yen, aided by bearish economic news in Europe and political upheaval in Japan.
Stocks
The Dow industrials veered sharply lower in late action as a wave of computer-guided sell orders swept through the market, the result of the quarterly “triple witching” expiration of key stock index futures and options.
The Dow finished down 27.12 points to 3,494.77, producing a loss for the week of 10.24 points.
Losing issues topped winners by about 9 to 5 on the New York Stock Exchange, where volume swelled to 300.50 million shares.
While the market was hurt by technical trading related to futures and options expirations, the overall mood was bearish anyway, traders said. A major depressant was a new wave of selling of key consumer-growth stocks, on further disappointing earnings news.
Among the highlights:
* Drugs stocks were slammed after brokerage Kidder Peabody warned of sharply lower earnings growth in the years ahead. Merck sank 1 5/8 to 37, Johnson & Johnson slumped 2 7/8 to 42 7/8, Eli Lilly lost 1 1/8 to 49 1/2 and American Home Products tumbled 2 1/4 to 65 3/8.
Also in the health care area, Homedco plunged 4 3/4 to 23.
* Riverboat gambling stocks plummeted after Presidential Riverboat failed to secure one of the remaining licenses for a riverboat casino off New Orleans. Also, Hollywood Casinos was refused a license for a riverboat in Lake Charles, La.
Presidential collapsed 12 5/8 to 31 1/4, Hollywood dropped 4 to 22 1/2, Grand Casinos sank 5 to 34, Argosy Gaming fell 4 1/2 to 29 1/4 and Casino Magic tumbled 4 3/4 to 73 1/2.
* After the market closed, athletic shoe leader Nike warned of slowing growth. Its shares sank 4 7/8 to 62 in after-hours trading.
* On the upside, some investors sought refuge in industrial stocks. Alcoa rose 3/4 to 67 1/2, Cincinnati Milacron gained 1 5/8 to 24 1/4, GM Hughes rose 1 7/8 to 31 1/2 and Deere added 5/8 to 65 3/8.
Overseas, Tokyo’s Nikkei index continued to sink, losing 120.97 points to 19,804.54.
In Frankfurt, the DAX index lost 5.39 points to 1,686.90. In London, the FTSE-100 index added 3.7 points to 2,879.4.
Other Markets
The dollar surged against the Japanese yen and German mark, extending a weeklong march.
Japanese Prime Minister Kiichi Miyazawa’s humiliating no-confidence vote in the Diet plunged the nation into political uncertainty, turning the tide on the yen’s big rise over the dollar this year.
In New York, the dollar leaped to 109.75 yen from 107.30 on Thursday.
Against the mark, the dollar closed at a three-month high of 1.681, compared to 1.659 on Thursday. Recent signs of the German economy’s malaise have convinced dealers that the Bundesbank will cut interest rates, possibly next week. That would further depress the mark.
Meanwhile, in the U.S. Treasury bond market, short-term rates inched up. The yield on one-year T-bills rose to 3.50% from 3.46% on Thursday.
But long-term rates were mostly unchanged. The yield on the Treasury’s 30-year bond dipped to 6.80% from 6.81% on Thursday.
In commodities trading, light, sweet crude oil dipped 3 cents at $18.67 on the New York Merc.
On New York’s Comex, gold for current delivery rose 30 cents an ounce to $371.30. Silver lost 5.2 cents to $4.28.
Market Roundup, D4
