Stocks Slide Again; Dow Off 34 to 5,972
Stocks slumped in a late sell-off Monday, as the slow but steady profit-taking wave of recent sessions continued to take its toll on share prices.
The Dow Jones industrials slid 34.29 points to 5,972.73, the fifth loss in six sessions. The index now is at its lowest level since Oct. 11--just before it topped the 6,000 mark for the first time.
From its peak of 6,094.23 on Oct. 18, the Dow has given back 2%.
In the broad market Monday, losers significantly outnumbered winners, by 15 to 9 on the New York Stock Exchange and by 24 to 16 on Nasdaq.
Many broad-market indexes were down more in percentage terms than the Dow. The Russell 2,000 index of smaller stocks slumped 2.87 points, or 0.8%, to 340.10.
Analysts said jittery investors are finding plenty of reasons to take some money off the table, after many stocks hit record highs earlier this month.
For one, a barrage of economic data is due this week, including Friday’s report on October employment. There have been fears lately that the economy is reheating, which could have negative implications for interest rates.
Second, with the election a week away, some Wall Streeters are worried that the Democrats will retake the House of Representatives, possibly returning a liberal, less-business-friendly bias to Washington policy.
Third and perhaps most important, mutual fund managers must offset portfolio gains and losses for tax reasons by Thursday, for purposes of paying out 1996 capital gains to shareholders. So selling could accelerate as more fund managers dump their dogs, analysts warn.
“There’s nothing fundamentally wrong with the market,” argued Thom Brown, managing director at Rutherford Brown & Catherwood.
Indeed, despite the stock market’s alleged worries about economic data and politics, the bond market remains fairly unruffled. The bellwether 30-year Treasury bond yield inched up to 6.83% Monday from Friday’s 6.81%.
Meanwhile, the dollar Monday climbed to its highest level in 3 1/2 years against the Japanese yen, which continues to suffer from Japan’s indecisive general election Oct. 20.
“It’s the concept of the hung parliament and . . . that interest rates are going to remain low there,” said Tim Summerfield, trader at Bank of Boston.
The dollar rose to 114.20 yen in New York, from 113.31 on Friday.
Among Monday’s highlights:
* Drug stocks fell in continued profit taking, leading the market lower. Pharmacia & Upjohn slid 1 1/2 to 37, Pfizer lost 1 3/4 to 79, Eli Lilly dropped 1 5/8 to 68 1/8 and Bristol-Myers was off 2 5/8 to 103 1/8.
* The tech sector was mixed. Electronic Data Systems, which was pounded last week after warning of slower growth in the near term, sank 5 to 41 1/8 in what some analysts said was a good example of a stock being tossed out by fund managers before the Thursday tax deadline.
Other weak tech issues that may be suffering from tax-related selling include Motorola, off 1 to 46 1/2; AMP, down 7/8 to 33 7/8; Gateway 2000, down 3 to 47 1/4; and Micron Technology, down 1 to 27 1/4.
But Intel added 5/8 to 106, Microsoft gained 3/16 to 136 5/8 and IBM was up 7/8 to 127 3/8.
* Defense stocks also suffered from profit taking. Rockwell lost 1 1/8 to 55 5/8, United Technologies dipped 1 7/8 to 127 and Raytheon eased 3/4 to 48.
* Energy-related stocks were mixed. Chevron sank 1 1/8 to 66 and Unocal was off 1/2 to 35 1/2, but Halliburton gained 3/4 to 57 1/2 and Royal Dutch Petroleum was up 1 1/8 to 170 3/8.
* In the takeover arena, Loctite soared 11 3/4 to 58 after Germany’s Henkel said it intends to buy the portion of Loctite that it does not already control, for $56 a share, or $1.12 billion.
* RJR Nabisco rose 3/4 to 28 7/8. The company reiterated that it sees no spinoff of its food unit before 1997. Oppenheimer & Co. said it sees an upside target of $35 for RJR if there is no spinoff and $40-plus if there is a spinoff.
* Tele-Communications rose 1/2 to 12 5/8, rebounding a bit from its recent slide. It said its free cash flow will be positive in 1997 for the first time in several years.
In foreign trading, Korea’s composite index tumbled 1.7% to 780.08 on worries about a heavy supply of new stock issues on the horizon.
In Mexico, the Bolsa index lost 0.5% to 3,216.47, reacting to the newest economic “pacto’ signed over the weekend by the government, business and unions.
In commodity markets, coffee prices rose amid growing concern about tight supplies worldwide. Trade and speculative buying drove the December contract sharply higher as the market awaited weekly data on U.S. certified stocks, which were issued after the close.
The report showed a drop of 4,036 132-pound bags to just 1,547 bags and prompted New York’s Coffee, Sugar and Cocoa Exchange to seek more money from traders wishing to trade the volatile December contract. It rose 3.10 cents to 119.10 cents a pound.
Market Roundup, D18
