Dow Slips 23 as Oil Nears 10-Year Low
Stocks fell Monday, halting a modest recovery from last week’s sell-off, in a sleepy session offering few clues on the economic uncertainties hanging over the market.
Bond prices edged slightly higher as the dollar reached a two-month high against the Japanese yen, fueling fears of further currency devaluations in Asia that would hurt U.S. corporate profits.
World oil prices crashed back toward 10-year lows Monday under the weight of new evidence of a continuing glut of crude, while copper prices ended lower on renewed concerns about weak Asian demand.
“The tone is very guarded, while everyone is keeping a watchful eye on Asia, which looks troubling,” said Hugh Johnson, chief investment officer at First Albany.
The Dow Jones industrial average closed with a loss of 23.17 points at 8,574.85 despite overcoming an early 54-point drop.
Declining issues outpaced advances by more than 2 to 1 on the New York Stock Exchange in moderate trading.
The Standard & Poor’s 500 fell 6.31 points to 1,083.14, and the technology-heavy Nasdaq composite index fell 7.56 points to 1,839.21.
The NYSE composite index fell 3.78 points to 545.72, and the American Stock Exchange composite index was off 4.27 points at 679.80.
The Russell 2,000 index of smaller companies fell 4.16 points to 411.64.
The small downturn snapped a three-session winning streak for the Dow, which had regained 110 points in the aftermath of last Tuesday’s 299-point plunge.
“It’s part of the stabilization process after a big decline. There’s usually testing, both to the upside and to the downside,” said Arnold Kaufman, a market analyst at Standard & Poor’s who suggested that a weaker showing among smaller-company shares may have undermined Monday afternoon’s turnaround bid.
The market also drew some pressure from a sixth straight losing session in Tokyo. The Nikkei stock average fell 1.3% on Monday amid news of another major corporate failure and signs of political bickering that could delay measures to revive the sickly Japanese economy.
U.S. bonds crept up in price, pushing yields to one-month lows, amid speculation that the financial turmoil in Asia and elsewhere will bolster demand at the Treasury’s $37-billion quarterly debt sales this week.
The price of the benchmark 30-year Treasury bond edged only slightly higher, leaving its yield unchanged at 5.62%.
Among Monday’s highlights:
* J.P. Morgan led the Dow’s decline, falling $3.31 to $120.19, and leading other bank issues with exposure in Asia lower. Chase Manhattan fell 69 cents to $68.50, Bankers Trust dropped $3.56 to $101.38 and BankAmerica declined $1.25 to $83.31.
* Drug makers gained for the third time in four days on speculation that they will be sound investments amid Asia’s slump.
Merck rose $2.25 to $126.13, Warner-Lambert rose $2 to $73.63 and Schering-Plough climbed $1.56 to $94.56.
* Oil services companies declined as crude oil futures fell 75 cents, or 5.4%, to $13.05 a barrel. Baker Hughes fell $1.50 to $22.38. Schlumberger fell $2.06 to $56.25. Dresser Industries fell $1.88 to $31.
In currency trading, the dollar fetched 146.15 yen as the market worried that the Japanese government was not acting quickly enough to tackle problems in its banking system.
In overseas trading, Tokyo’s 225-share Nikkei average closed down 1.28%. London’s FTSE-100 closed at 1.6% and Frankfurt’s DAX index fell 1.1%.
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Market Roundup, D13
