Equities Deserted for Fixed-Income Investments, Bonds : Markets: Chemical, drug and computer issues take the biggest hits. Dow drops sharply in last hour of trading.
Computer, chemical and drug issues--among those most sensitive to a slowing economy--took the greatest hits on Tuesday as investors deserted equities in favor of bonds and other fixed-income investments.
The bond market had its biggest one-day rally in more than three months as investors pushed the yield on the Treasury’s bellwether 30-year bond to 8.01% from 8.12% on Monday. Its price, which rises when yields fall, soared 1 7/32 points, or $12.19 per $1,000 in face value.
The Dow Jones industrial average skidded 36 points on sell programs at the open, then trimmed its losses to less that 20 points for most of the day. A powerful surge of sell programs sent the Dow sharply lower in the last hour of trading.
By the close, the blue-chip indicator had plunged 91.52 points to 3,677.99.
Economically sensitive stocks, those of large manufacturing and retail companies, took the brunt of the selling. “There’s a sense that earnings of these companies have reached a peak, and people are selling the stocks as a result,” analyst Hildegard Zagorski said.
Sellers cut a wide swath through the market, with declining issues swamping advancers by nearly 4 to 1 on the New York Stock Exchange.
Broad-market indexes also fell sharply. The NYSE’s composite index fell 4.26 points to 246.32. The Standard & Poor’s 500-stock index slid 8.21 points to 450.08.
The Nasdaq composite of mostly smaller issues dropped 16.53 points to 741.21 and the American Stock Exchange’s market value index dropped 5.14 points to 436.14.
Big Board volume was a heavy 383.26 million shares, up from 250.58 million on Monday.
Among the market highlights:
Among the 30 Dow components, 17 stocks lost a point or more. The biggest losers were Caterpillar, dipping 3 1/4 to 51 5/8; IBM, falling 3 1/8 to 69 3/4; International Paper, off 2 7/8 at 68 1/8; Alcoa, slipping 2 5/8 to 80 5/8, and Sears, declining 2 1/4 to 46 1/2.
* Technology stocks, which had been good performers and market leaders in recent sessions, fell sharply after Motorola sold new stock at a discount to prevailing market rates. Motorola was the most actively traded on the New York Stock Exchange and fell 2 to 57. The company sold 8 million shares at $58.50 per share.
* Compaq fell 2 to 38 and Micron Technology was off 1 3/4 at 38 7/8. Intel retreated 1 3/8 to 64 3/4 and Cisco Systems declined 2 5/16 to 30 5/8. Novell fell 1 3/8 to 18 7/8.
* Walt Disney Co. gained 5/8 to 43 after reporting strong earnings.
* Gaylord Entertainment rose 1 to 23 1/4. The country-entertainment company denied a USA Today report that it is up for sale.
* Brinker International sank 3 3/4 to 17 7/8 after saying its earnings for its second quarter would fall below analysts’ expectations.
* Restaurant chains were also off, including Outback Steakhouse Inc., which was downgraded by Morgan Stanley and tumbled 3 1/4 to 24 3/4.
* H&R; Block sank 6 7/8 to 33 1/2. Block said its financial unit will report lower earnings or a loss.
* Tektronix dropped 1 1/2 to 35 1/2. It said late Monday that Delbert Yocam resigned as the company’s president and chief operating officer.
Overseas stock markets were mostly lower.
In the currency market, the dollar finished lower against most leading currencies Tuesday, hurt by comments from Germany’s top central banker and a late plunge in Wall Street stocks.
Speaking to journalists in Europe, Bundesbank President Hans Tietmeyer said he favored a strong German mark. In addition, he said there was no pressure on the central bank to alter its monetary policy.
Market Roundup, D4
* MAIN STORY: A1
