FINANCIAL MARKETS : Dow Dives 27 at the Bell After Wallowing All Day
A wave of computer-generated selling programs sent stocks sharply lower in the last 90 minutes of trading Thursday, adding some action to an otherwise dull session.
The Dow Jones industrial average closed down 27.83 points at 4,643.66, after showing moderate losses for most of the day. Sell programs kicked in at about 2:30 p.m. in New York, sending the market sharply lower ahead of the close.
“It was not frantic selling, but it was sharp enough that you could very easily say it was program trading,” said Ricky Harrington, senior vice president and technical analyst at Interstate-Johnson Lane in Charlotte, N.C.
Broad-market stock indexes turned mostly lower.
Stocks dipped early in the session after the Labor Department said that, while the number of new jobless claims rose by 14,000 last week, the four-week moving average, considered by many to be a more accurate gauge, fell. Signs of strength in the economy would reduce the chance of further stimulus in the form of additional interest rate cuts by the Federal Reserve Board.
In a separate report, the Labor Department said its producer price index, which measures inflation at the manufacturing level, was flat in July after falling 0.1% in June for the first time in eight months. Wholesale prices are rising at a modest annual rate of 1.8% so far this year.
A successful Treasury auction of $11.5 billion of 30-year bonds completed a borrowing binge known as a quarterly refunding. The market yield on the 30-year bond rose to 6.94% from 6.92% Wednesday.
Among market highlights:
* Wednesday’s star performer, Netscape Communications, dropped 6 7/8 to 51 3/8. The stock was priced in an initial public offering at 28 and soared to 75 in heavy trading on Wednesday, before settling back to close in that session at 58 1/4.
The drop in Netscape pushed other technology stocks lower. In Nasdaq trading, Intel fell 1 7/8 to 64 1/4 and Microsoft slid 2 3/8 to 94 1/8. On the Big Board, IBM fell 3/4 to 109 1/8, and Micron Technology lost 1 3/8 to 61 3/4.
But technology stocks may recover today because, after the market’s close, the Semiconductor Industry Assn. said its North American book-to-bill ratio reached a record 1.22 in July, indicating that new orders are outstripping shipped products.
* The Dow industrials were led lower by International Paper, which slid 2 3/8 to 82 3/8 after negative comments by Smith Barney and market analyst Elaine Garzarelli.
* Tobacco stocks were little changed after President Clinton directed the Food and Drug Administration to restrict the marketing of cigarettes to children. Cigarette makers promptly sued the FDA, seeking a judicial ruling that the agency has no authority to regulate cigarette sales.
* The dollar rose against the German mark despite disappointment that the Bundesbank, Germany’s central bank, left official interest rates unchanged at its council meeting.
The report indicating lower inflation rates in the United States also was credited with strengthening the greenback. The dollar climbed to 1.4185 German marks in late New York trading from 1.4062 late Wednesday. During the session it touched 1.4245 marks, the highest in two months.
The dollar, which hit a five-month high of 92.95 Japanese yen in Wednesday trading, backed off a bit at 92.62 yen.
In overseas stock markets, the Nikkei index in Tokyo fell 0.36%, and the DAX index in Frankfurt eased 0.14%. But London’s FTSE-100 index rose 0.18%.
