Dow Drops 39, Pushing 1-Week Loss to 400 Points
Blue-chip stocks racked up big losses again Thursday, boosting the Dow’s losses to more than 400 points since the rout started a week ago on concern over further interest rate hikes by the Federal Reserve Board.
The Dow Jones industrial average fell 39.66 points to end at 6,477.35, standing just above its 1997 start of 6,448.27.
In the broader market, declining issues beat advancers 1,516 to 894 on active volume of 495 million shares on the New York Stock Exchange.
A rally in battered technology stocks buoyed the Nasdaq composite index, which ended 12.76 points higher at 1,213.76.
All eyes were on today’s report on the payrolls, wages and unemployment numbers for March, and the possible impact the data might have on the Fed’s decision whether to raise interest rates again.
“It could be a killer if it goes the wrong way,” said Jim Benning, a trader at BT Brokerage.
Bonds were little changed for a third day as investors braced for the jobs report, which is likely to show rising wages and brisk employment growth, investors said. That could trigger Fed governors to boost the target for overnight lending between banks at their meeting May 20. The central bank raises rates to cool the economy and stifle inflation.
The benchmark 30-year Treasury bond was little changed as its yield fell to 7.06% from 7.07% on Wednesday. The two-year note’s yield also fell, to 6.37% from 6.38%.
The dollar fell against the German mark after two German economic reports suggested that the Bundesbank won’t cut interest rates any time soon.
The dollar fell to 1.6680 marks from 1.6762 and to 122.62 Japanese yen from 122.90.
The dollar was weighed down against the yen by concerns the Clinton administration may yet back away from its strong dollar policy. Administration officials have repeatedly warned Japan in recent days not to export its way out of recession with a weaker yen.
The Standard & Poor’s composite index of 500 stocks rose 0.21 point to 750.32. The American Stock Exchange index lost 3.37 points to 557.82.
The NYSE composite index of all listed common stocks fell 0.97 point to 394.40. The average share was down 10 cents.
With the day’s losses, the Dow has shed more than 400 points since its steep downturn began March 27. The closely watched gauge of 30 blue-chip stocks has fallen 8.6% since its record closing high of 7,085.16 on March 11.
But while blue chips floundered, the technology stocks that led the downturn found some buyers.
Among Thursday’s highlights:
* In leading technology issues, Intel rose 3 5/8 to 140 5/8, Microsoft gained 3 1/8 to 95 1/8 and Oracle added 1 7/8 to 38 5/8.
IBM did not take part in the tech stock rebound. The computer giant’s stock tumbled 2 5/8 to 131 1/8 on renewed fears that a stronger dollar and a mainframe product transition will hurt its first-quarter earnings.
Lucent Technologies jumped 1 3/4 to 52 after the company told analysts it has cut internal costs and expects strong second-quarter sales in its software and wireless divisions.
Microchip Technology gained 1 13/16 to 31 1/8 after saying it expected its revenue and earnings for its fiscal fourth quarter ended March 31 to reach record levels. Advanced Micro Devices fell 1 1/2 to 38 after it introduced its K6 chip, which it hopes will boost earnings and help it compete better against industry leader Intel.
* Battered financial stocks attracted buyers. Morgan Stanley Group jumped 2 3/8 to 59 7/8, Citicorp rose 1 3/4 to 111 5/8 and BankAmerica added 1 to 101 1/8.
* Pharmaceutical company Rhone-Poulenc Rorer lost 2 3/4 to 69 3/4 after a Salomon Bros. analyst downgraded his rating on the stock and cut his 1997 earnings-per-share forecast on the company.
* Broadcasting shares were higher after the Federal Communications Commission voted to give digital licenses to the nation’s 1,600 TV stations. Walt Disney, parent of ABC Television, gained 1/4 to 72 5/8; General Electric, which owns NBC, rose 5/8 to 98 3/8; and Westinghouse Electric, parent of CBS, was unchanged.
* Alex. Brown gained 3 1/4 to 44 5/8 on speculation that the Baltimore-based investment banking company may be acquired by Bankers Trust New York. Bankers Trust gained 1 3/4 to 82 5/8.
Overseas, Tokyo’s Nikkei stock average rose 0.5%, Frankfurt’s DAX index fell 2.6% and London’s FTSE-100 fell 0.5%.
