FINANCIAL MARKETS : Stocks Dampened by Selloff as Tech Issues Lose Luster
A selloff in technology issues led the stock market lower Thursday, in the second consecutive session of decline since a strong run-up to the highest level in half a year. A jump in Treasury yields in the morning contributed to the decline of stocks, though bonds ended the day virtually unchanged.
By the closing bell, the Dow Jones industrial average had recovered more than half what it lost during the day. It ended at 3,901.44, off 11.98 but still less than 100 points from its all-time high.
Bill Allyn, director of listed equity trading at Jefferies & Co., said prices were drifting downward because of diminished participation. “I think it’s listless trading before the (Labor Day) weekend,” Allyn said. Also, August unemployment figures were due out today.
Declining issues outnumbered advancing ones more than 3 to 2 on the New York Stock Exchange. Heavy selling of technology issues pushed broad market indexes lower. The NYSE’s composite index fell 1.01 to 260.98. The Nasdaq index fell 6.67 to 758.95. Standard & Poor’s 500 slipped 2.32 to 473.17.
“The technology stocks had big run-ups,” said Jonathan Dodd, market analyst at Dean Witter. “Some of these have gotten extended, and that’s the reason you’re seeing some of them getting hit so hard.”
Traders said the selling was triggered by the news Wednesday that computer maker AST Research Corp. would post a loss for its current quarter and show flat revenue. Also, SoundView, an investment firm that specializes in technology stocks, downgraded Compaq and Microsoft, just one day after it downgraded Texas Instruments and Micron Technology. Arnold Owen, managing director of trading at SoundView, said analysts at his firm are concerned that a price war and diminishing orders will compress the margins for personal computer companies.
The bond and dollar markets were quiet and little changed Thursday, as traders awaited the August employment report. Bond yields initially rose after the release of a National Assn. of Purchasing Management report that indicates a slowdown in manufacturing in August and that manufacturers had paid more for supplies last month. Both figures raised concerns about inflation.
Among Thursday’s market highlights:
* AST sank 4 15/16 to 13 1/16. Compaq Computer dropped 2 1/4 to 35 and International Business Machines lost 5/8 to 67 7/8. Microsoft was down 2 to 56 1/8; Apple fell 13/16 to 35 3/8; Dell Computer was down 1 to 31 1/2; Intel slipped 1 1/2 to 64 1/4.
* CBS jumped 11 1/8 to 332 1/2 on speculation about mergers among some of the big media networks.
* Retail issues were mixed following the release of August retail sales figures. Gap fell 4 3/4 to 38 1/4; Dayton Hudson lost 3 5/8 to 81 1/8. Federated reported a 5.9% rise in sales at stores open at least a year, and its shares jumped 1 3/8 to 22 1/2.
* In London, the pound advanced in New York to $1.5455 from $1.5345. Jim Blackwelder, a vice president at NatWest Financial Markets Group, said the pound drew strength from growing speculation that the Bank of England will raise interest rates to cool the British economy and from optimism about ending civil strife in Northern Ireland. Shares in London ended sharply lower, however, as many players were wary after a recent rally. The FTSE-100 index fell 34.8 points, or 1.07%.
Frankfurt share prices finished the day lower after the Bundesbank announced it was leaving interest rates unchanged. Other European markets closed lower. Tokyo’s Nikkei average rose 14.40 points, or 0.07%, to 20,642.93.
Market Roundup, D6
