Dow loses 8.11 on disappointing news

WALL STREET

December 03, 1992|By Bloomberg Business News

NEW YORK -- Stocks stumbled yesterday for a second consecutive day after the release of disappointing economic news.

Sales of new single-family homes tumbled in October by 10.3 percent, the largest decline since March, the Commerce Department reported. "The economic report definitely caught some people by surprise," said Alfred Goldman, market analyst at A.G. Edwards & Sons Inc.

The Dow Jones industrial average declined 8.11, to 3,286.25, led by a slump in Caterpillar, which fell $2.25, to $54.375, after the company said it would report a loss in the fourth quarter.

The NASDAQ Combined Composite index of smaller stocks declined 1.07, to 652.88, ending a streak of five straight advances. The Standard & Poor's 500 index fell 0.89, to 429.89. Trading was active, with 244 million shares changing hands on the New York Stock Exchange. Declining stocks outnumbered advancing issues by more than 4-to-3.

"The decline is healthy for the stock market," Mr. Goldman said, noting that the Dow has risen about 100 points in the past two weeks and that the NASDAQ composite and S&P 500 hit new highs this week. "The stock market needs time to regroup before heading to even higher highs."

The stock market, Mr. Goldman said, will continue to be led higher by perceptions that the economy is improving and that corporate earnings will increase at annual rates of more than 15 percent. "All this will happen in an environment of low inflation," which will keep a cap on Treasury bond yields, he said.

"I think you're going to see people take advantage of the stock market's weakness [yesterday] and buy more stocks," said John Brooks, director of sales and marketing at Yelton Fiscal.

A slump in international oil, health care, telephone and drug stocks weighed down the market. Oil stocks, such as Exxon, Amoco, Chevron and Mobil, are being hurt by the 12 percent slide in crude prices since mid-October.

"The decline in oil prices is definitely starting to weigh on this group," said William Hyler, an analyst at Oppenheimer & Co. Mr. Hyler reduced his rating on Apache to "market performer" because of concerns about falling oil prices. Apache fell $1.375, to $17.625.

Unisys rose 50 cents, to $10.25, on reports that the company's stock could reach $17 within 18 months. Dan Dorfman, a widely followedstock market commentator, quoted an analyst at Chicago Corp. who said he expects Unisys' stock to double by mid-1994.

NationsBank Corp. fell 12.5 cents, to $50.50, as the stock pulled back after a seven-week rally. Shares of NationsBank have risen 21 percent since Oct. 9. The bank is reportedly in talks with Chemical Banking and BankAmerica to determine how to combine check-processing operations.

Syntex rallied $1.375, to $24.375, on reports that an independent analyst at Fendrich Associates said the stock could hit $30 within three months.

Symantec gained $2.375, to $14.375, in NASDAQ trading after an analyst at Robertson, Stephens & Co. repeated a "buy" rating on the computer company's stock. The analyst said business is improving, led by the introduction of new software products.

General Mills Inc. slid $1.75, to $67.25, after an analyst at Goldman, Sachs & Co. cut her rating on the food company to "market performer."

Value Merchants Inc. fell $2, to $10.75, after Kidder, Peabody & Co. removed the stock from its "buy" list.

L.A. Gear Inc. declined $1.625, to $10.25. The company said it expects to report a fourth-quarter loss of between $27 million and $31 million.

Centel Corp. was unchanged, at $33.875. Chairman John Frazee said he is confident that Centel's $3 billion merger with Sprint Corp. will be approved by Centel shareholders. The results of the vote will be compiled by Dec. 11.

Reynolds Metals Co. slumped $1.50, to $54.125, after Chairman Richard Holder said the company plans to build aluminum plants throughout the world.

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