Dow Slides 96.55; Bond Prices Leap
Stocks slid at the close again Monday after several halfhearted attempts to halt a steep downturn now entering its third week. The Dow Jones industrial average fell 96.55 points to 8,786.74, about 550 points below its closing record of 9,337.97 set July 17 and the lowest finish since June 22.
The barometer of 30 big companies bobbed into positive territory twice during the day, but quickly pulled back as jittery investors used any hint of strength as a chance to take money off the table. The Dow had skidded 143 points Friday, mostly in the final hour.
“It’s not a happy pattern to see selling at [the] close,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman & Co., suggesting that strength in bonds and continued signs of bargain hunting indicate that the market is “building toward a pretty good bottom.”
Bond prices posted their biggest gain in seven weeks after a nationwide manufacturing report indicated that the economy is slowing, and the dollar rallied further against the Japanese yen.
“Our outlook is still for lower yields,” said David Jallits, who helps manage about $5.5 billion at Strategic Fixed Income in Arlington, Va. He sees 30-year bond yields falling to 5.5% in the months ahead.
The yield on the benchmark 30-year Treasury bond fell to 5.66% from 5.71% on Friday.
Broader stock indicators, meanwhile, posted hefty losses, with smaller-company shares continuing a rapid descent toward what may soon be classified as a bear market in that sector.
The Russell 2,000 index of smaller companies fell 6.39 points to 413.36, a one-year low and nearly 16% below April 21’s peak of 491.41.
A bear market is typically defined as a 20% decline. Despite the sharp retreat of recent weeks, big-company gauges such as the Dow and Standard & Poor’s 500 are only about 6% off their record highs and still boast gains of more than 10% for 1998.
The Dow’s biggest decliners Monday were Procter & Gamble, down $3.13 to $76.25, and J.P. Morgan, down $3.50 to $122.63.
The Nasdaq composite index fell 21.29 points to 1,851.10, with the continuing weakness among its thousands of small-company issues negating a steady showing by several leading technology stocks: Dell Computer rose $1.28 to $109.19, and Intel rose 38 cents to $84.81.
Declining issues outnumbered advancers by a 2-1 margin on the New York Stock Exchange. The S&P; 500 index fell 8.23 points to 1,112.44, the NYSE composite index fell 4.38 points to 560.89, and the small-company dominated American Stock Exchange composite index fell 8.39 points to 697.87.
Among Monday’s highlights:
* American Stores rose $5.31 to $28.50 after Albertson’s agreed to acquire the No. 3 supermarket chain for $11.7 billion in stock and assumed debt to create the largest U.S. chain of supermarkets and drugstores. Albertson’s rose 50 cents to $48.50.
* Bergen Brunswig fell $7.88 to $45.13 and AmeriSource Health fell $20.13 to $56 on concern about their prospects for growth after a judge on Friday blocked Cardinal Health’s purchase of Bergen and McKesson’s acquisition of AmeriSource, saying the transactions would probably reduce competition in the $94-billion-a-year U.S. pharmaceutical distribution industry. Cardinal Health fell 6 cents to $96. McKesson fell $2.25 to $82.88.
* Egghead.com fell $1.75 to $12.75 after the Internet-based retailer of computer software and hardware said its loss widened to 24 cents a share in its fiscal first quarter ended June 27, from 21 cents a year ago.
Overseas, Tokyo’s Nikkei stock average fell 1.3%, Frankfurt’s DAX index fell 2.7% and London’s FTSE-100 fell 0.5%.
In currency trading, the dollar reached 145.60 yen, up 0.95.
Market Roundup, D18
