FINANCIAL MARKETS : Dow Rides Roller Coaster Down 29.98; Yields Steady
Blue chips closed sharply lower Wednesday as nervous investors sold some market favorites to lock in profits, and financial stocks were hit hard by jitters over consumer credit problems.
The Dow Jones industrial average ended with a loss of 29.98 points at 4,753.68 in a brisk retreat from the previous session’s 28-point rally.
In the broader market, declining issues swamped advances 1,515 to 796 on heavy volume of 433 million shares on the New York Stock Exchange.
The Dow has been on a roller-coaster ride this week, slumping 39 points Monday and climbing 28 on Tuesday. It lost nearly 50 points in Wednesday’s trading before cutting its loss in the final minutes of business.
“Cyclicals and financial stocks are getting killed,” said Douglas Cliggott, a senior investment strategist at Merrill Lynch. He said the strong fundamentals for large money-center banks and property casualty insurers remain intact and he viewed the selloff as an “overreaction.”
Bond investors ignored the potentially inflationary aspects of a housing report, with bond yields dropping just slightly and remaining fairly stable most of the day.
Among the market highlights:
* Financial stocks were major losers, with Citicorp off 1 5/8 to 64 5/8, Chemical Bank down 5/8 to 56 3/8 and MBNA off 1 to 36. Wells Fargo sank 12 1/4 to 207 1/4 and First Interstate shed 10 1/2 to 120 1/2.
“There was a double shock for the financials,” Cliggott said. “Fed Chairman Alan Greenspan at the end of last week suggested a hesitancy on the Fed’s part to lower rates, and now we have some highly publicized credit card delinquency rates.”
Loan company Money Store said its delinquency rate was “considerably higher” in the third quarter; shares plunged 12 5/8 to 42 1/2.
* Economically sensitive cyclical stocks were pressured after chemical giant DuPont reported higher third-quarter earnings but forecast “moderately negative to flat” fourth-quarter revenue. DuPont’s stock slid 3 7/8 to 61 1/8, representing a drop of more than 11 points in the Dow average.
* Technology stocks also fell. On the Big Board, IBM fell 1 7/8 to 96 1/8 and Micron Technology lost 2 7/8 to 68 3/8 in leading volume of 6.6 million shares.
* On the plus side, United Technologies, another Dow index component, rose 3 7/8 to 88 3/8. The company said its third-quarter profit rose 12%.
In overseas markets, the Nikkei-225 index in Tokyo fell 0.2%. But Frankfurt’s DAX index added 1.73%, and the FTSE-100 in London edged up 0.07%.
A fall in distillate fuel supplies sent heating oil prices higher Wednesday, but a buildup in crude oil stocks left those prices unchanged. Several analysts had expected lower crude supplies due to the interruption of Mexican exports because of Hurricane Opal.
Most of the buildup in oil stocks occurred on the West Coast, making up for a decline in the Gulf Coast region due to Mexico’s problems.
December crude ended unchanged at $17.32 a barrel and November heating oil gained 0.22 cent at 49.58 cents a gallon. November gasoline declined 0.18 cent to 49.69 cents a gallon.
Market Roundup, D6
