As bonds drop, Dow falls 39.98 points

September 23, 1992|By Bloomberg Business News

NEW YORK -- Stocks closed broadly lower yesterday, swamped by a plunge in Treasury bonds and some prominent blue-chip issues.

Nervousness over corporate earnings and the presidential election, coupled with computer-driven sell orders, also pulled stocks lower.

The Dow Jones industrial average slid 39.98, to 3280.85, led by losses in Coca-Cola, Allied-Signal and General Motors. Computer-guided sell orders whacked 36 points off the blue-chip average, according to Birinyi Associates.

Standard & Poor's 500 sank 5 points, to 417.14, with soft-drink, auto, oil, and health-care stocks pacing the retreat. The NASDAQ composite dropped 5.58, to 583.

Decliners outpaced advancers by a margin of 10 to 4 among common stocks on the New York Stock Exchange. Trading was active, with almost 190 million shares changing hands on the Big Board.

"I would say it's mainly the bonds" hurting the stock market, said Edward Laux, head of trading at Kidder, Peabody & Co. "But there's still problems with the currency and interest rates and nervousness about the election."

The dollar and bonds fell on reports that Germany's M3 money supply had surged 9 percent in August, --ing hopes for easier credit from the Bundesbank soon.

Treasury bonds fell further after the Commerce Department said housing starts had soared 10.4 percent in August, the largest gain in more than a year. Bonds tumbled despite strong results from the Treasury's two-year note auction.

Skittishness about the November presidential election also soured investors on stocks yesterday. A new ABC News-Washington Post poll found Gov. Bill Clinton commanding a lead of 58 percent to 37 percent over President Bush, who, as a Republican incumbent, is a traditional favorite on Wall Street.

Exabyte, Gensia Pharmaceuticals, Chrysler, General Motors and Coca-Cola were the five-most-actively traded stocks.

"GM, like IBM, is a stock that can drag the whole market down," said William Lord, a trader at Lehman Brothers.

General Motors skidded 1 1/4 , to 33, after the company slashed its estimate for third-quarter North American production by 8.1 percent.

Ford fell 2 1/8 , to 40 1/2 , and Chrysler dropped 5/8 , to 23 3/8 .

The decline in auto stocks was triggered yesterday when a Wertheim Schroder analyst reduced his earnings estimates for GM and Ford and lowered his opinion of Chrysler stock to "neutral" from "attractive."

Coca-Cola fizzled 2 1/4 , to 42 1/2 , after the company told analysts that it expects third-quarter international sales to remain around last year's level.

Coca-Cola signaled earlier this year that growth was slowing in the United States and some key overseas markets. That message has weighed on the stock in recent months.

"The concern is if Coke breaks 40, it's going down a lot more" said Richard Ciardullo, head of trading at Eagle Asset Management.

Exabyte plunged 9 1/8 , to 14 5/8 , after the company said third-quarter results would fall well below analysts' expectations because of the global recession in computer systems.

Gensia crashed 13 5/8 , to 22, after the company said a study showed that its Arasine drug for patients undergoing coronary bypass surgery did not prove as effective as the company had hoped.

Fingerhut slumped 3 1/2 , to 27, after the company predicted lower third-quarter earnings. Problems in gearing up operations at a Tennessee distribution facility and the weak economy were cited for the shortfall.

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