FINANCIAL MARKETS : Dow Dips 11.18 in End-of-Quarter Trading : Market Overview
Stocks meandered to a mostly lower close Thursday after a session marked by profit taking and maneuvers associated with the quarter’s end.
* Bond yields rose modestly as the market reacted to several reports pointing to a pickup in economic growth.
Stocks
The rising long-term interest rates, which caused a corresponding decline in bond prices, put a damper on activity in the equity market. A drop in General Motors shares also hurt the Dow Jones industrials.
Much of the profit taking is tied to end of quarter account settlements, or “window-dressing,” in which traders buy and sell stocks to lock in profits.
The Dow finished off 11.18 at 3,555.12 and several other market indicators also ended the session in the minus column.
But advancing issues outnumbered declines in the late tally on the New York Stock Exchange, with 1,124 stocks rising in price and 870 falling. Big Board volume amounted to 285.03, up modestly from the previous session’s 277.77 million.
Among broad market measures, the NYSE composite slipped 0.37 to 255.23 and the Standard & Poor’s 500 stock index fell 1.18 to 458.93. The Nasdaq Stock Market’s composite index fell 0.39 to 762.78.
Wall Street observers said investment professionals finished the process of adjusting portfolios to weed out poor performers and add strong ones. This “window dressing” phenomenon typically takes place toward the end of calendar quarters and can have an impact on individual stocks and the overall market.
Ricky Harrington, senior vice president and technical analyst at Interstate/Johnson Lane, said the bond market’s mediocre showing and window dressing combined to exert negative pressure on stocks.
Among the market highlights:
* New issue Belden Inc. was among the most actively traded NYSE stocks, ending at 14 3/4 after being priced at 14 1/4 a share. The company makes wire, cable and cord products for electronics and electrical markets.
* General Motors fell 1 7/8 to 42 on fears that it would be forced to sign a labor pact with the United Auto Workers Union that offers costly job security and pension benefits.
* Rally’s Hamburger slipped 2 7/8 to 11 7/8. The company said its third-quarter and full year earnings will be below analysts’ expectations.
* Martin Marietta rose 3/8 to 89 after announcing plans to eliminate or consolidate plants to save $1.5 billion over the next five years.
* UAL, fell 3 3/4 to 137 1/4 after the flight attendants union pulled out of talks for employee ownership of the airline.
* WMX Tech, dropped 1 to 30 1/2 on heavy NYSE volume of 2.4 million shares
* UF&G;, lost 1 7/8 to 14 3/8 after an analyst sharply reduced earnings estimates for the company.
Foreign financial markets sent mostly positive signals to Wall Street. In London, the Financial Times 100-share average was up 7.4 points to 3,037 and Frankfurt’s blue-chip DAX average rose 8.02 points to 1,915.71. In Tokyo, 225-share Nikkei average ended up 28.30 points at 20,105.71.
Credit
Bond trading was light, magnifying the importance of some activity, partly because the day marked the end of the third quarter. Some institutions were limited in the amount of trading they could do because of the period’s end.
At the end of a strong quarter, traders frequently sit on their profits rather than risk hurting their performance figures because of one day’s trading.
The Treasury’s main 30-year bond yield rose to 6.02%. On Wednesday, the bond’s yield closed at 5.99%. Its price, which moves in the opposite direction, closed down 3/8 point, or $3.75 per $1,000 in face value.
The market slid Thursday morning after the Labor Department reported a decline of 11,000 people who filed jobless claims last week, the Commerce Department said personal income rose 1.3% in August and the Purchasing Management Assn. said business activity rose in the Chicago area in September.
The most talked-about indicator was the Chicago purchasing executives survey, which showed an index of business activity rose to 54.5% in September, up sharply from 50.2% in August.
The federal funds rate, the interest on overnight loans between banks, was 3.4%, up from 3.1% late Wednesday.
Other Markets
* Crude oil futures extended Wednesday’s gains on the New York Merc, rising 12 cents to $18.79 a barrel.
* Gold for current delivery closed on the New York Comex at $355.10 an ounce, up $2.40 from Wednesday. Silver closed at $4.061, up 4.9 cents an ounce.
* The dollar rose against all major currencies after the release of the better-than-expected monthly data on U.S. personal income and consumption.
Market Roundup, D6
How Stock Indexes Fared
Most key market indexes rose in the third quarter, but the market’s strength was clearly in smaller stocks, as measured by the Russell 2000 index. The blue-chip Dow industrials were weak. Russell: 3rd qtr.: +8.4% 9 months: +14.5%
S&P; mid-cap: 3rd qtr.: +4.5 9 months: +9.4
Dow industrials: 3rd qtr.: +1.1 9 months: +7.7
NYSE: 3rd qtr.: +2.5 9 months: +6.3
S&P; 500: 3rd qtr.: +1.9 9 months: +5.3
Source: Los Angeles Times
