IBM, Goodyear help push Dow loss streak to 6th day

WALL STREET

December 17, 1992|By Bloomberg Business News

NEW YORK -- U.S. stocks, thrashed in the final hour by a barrage of computer-driven sell orders, closed lower yesterday for the sixth consecutive session.

Continued weakness in market laggard International Business Machines Corp. sank the Dow Jones industrial average for the second straight day, while a surge in Intel Corp. curbed losses in the over-the-counter market.

The DJIA lost 29.18 to 3255.18. IBM and Goodyear Tire & Rubber accounted for much of the decline.

Standard & Poor's 500 fell 1.05 to 431.52, and the NASDAQ Combined Composite Index slipped 1.12 to 649.63. The American Stock Exchange Market Value Index fell 1.36 to 389.30. Decliners outnumbered advancers 9 to 5 among common stocks on the New York Stock Exchange. Trading was brisk, with more than 233 million shares changing hands on the Big Board.

"It's a whole combination of things" that drove stocks lower, said Richard Meyer, head of institutional trading at Ladenburg Thalmann. "Part is tax-loss selling and part is triple witching," the quarterly options and futures expiration that occurs tomorrow. Trading is often volatile in the sessions preceding the expiration.

Stocks opened higher after the Commerce Department said construction of single-family houses soared 1.5 percent in November to the highest rate since March.

But any optimism generated by the report was quickly countered by the continuing woes at IBM, which caused stocks to retreat gradually throughout the day.

In the face of IBM's troubles, the good news on home construction "didn't have a whole lot of impact," said Dale Tills, manager of institutional equities at Charles Schwab in San Francisco.

"Everybody's looking at the IBM scenario and the fact the economy may not have turned around -- that earnings may not be as positive as people had hoped," Mr. Tills said. Toward the close, investors began dumping S&P 500 stocks for March delivery, sending the market into a tailspin.

"People sold futures to short the market, and it started to feed into the rest of the market," said Thomas Gallagher, managing director of capital commitment at Oppenheimer & Co.

Massive sell orders were triggered when S&P 500 stocks for March delivery dropped below last week's low of 432.80, considered by chart watchers to be a near-term bottom, traders said. The decline that ensued compounded the earnings woes that drove stocks from their morning highs, traders said.

Computer systems, led by IBM, fell the most among S&P 500 industry groups. IBM, grappling with a major restructuring, tumbled $4.25 to $51.875 on the computer giant's plan to take a $6 billion charge in the fourth quarter to eliminate 25,000 jobs next year and possibly cut its dividend. IBM dropped as low as $51.50 yesterday.

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