Dow falls 22.42, but small stocks rise to record high


December 30, 1992|By Bloomberg Business News

NEW YORK -- A burst of computer-driven sell orders knocked blue-chip stocks lower yesterday, while smaller NASDAQ stocks rose to record levels.

"This is a crazy market," said Daniel Marciano, vice president in equity trading at Dillon, Read & Co.

The Dow Jones industrial average slumped 22.42, to 3,310.84. Most of the decline occurred in the final hour of trading. Shares of Minnesota Mining & Manufacturing, International Business Machines Corp. and Goodyear accounted for much of the Dow's decline.

Positive economic news and a rally in retail-store shares pushed the NASDAQ Combined Composite index to a new closing high. dTC The NASDAQ composite rose 2.76, to 669.01, exceeding its previous high of 667.12, set Dec. 8.

Advancing stocks outnumbered declining issues by about 8-to-7 the New York Stock Exchange. Trading was active, with 217 million shares changing hands on the Big Board. The Standard & Poor's 500 index fell 1.17, to 437.98, and the American Stock Exchange Market Value index slid 0.35, to 393.83.

"The economic reports definitely gave the markets a boost, as more and more people are convinced the economy is recovering," said Barry Berman, at Robert W. Baird & Co.

The National Association of Realtors said sales of existing homes rose 5.8 percent in November, and the Conference Board said consumer confidence rose in December to its highest level since April 1991. Retail sales at more than 20 retail-store chains were 10.4 percent higher in December than a year ago.

"Sales were strong across the entire retail-store base," said Barbara Miller, an analyst at Alex. Brown & Sons.

Shares of retail stores rallied on the news. Sears was up 62.5 cents, to $45.75; Woolworth rose 87.5 cents, to $31.625; May Department Stores was up $1.50, to $71.50; and Dayton-Hudson Corp. rose 37.5 cents, to $75.

Stocks were boosted by speculation that fund managers are adjusting portfolios ahead of the new year by using cash to buy equities. "Money is pouring into the market, and the trend is likely to continue," said Richard Ciardullo, director of trading at Eagle Asset Management.

Leading investment management companies are holding more than 10 percent of their assets in cash. In addition, $9 billion will be returned to investors Jan. 1 from redeemed municipal bonds, and billions worth of certificates of deposit will mature.

"The combination of these things means buckets of cash will likely be poured into the stock market over the next several weeks," said William Lord, senior vice president in equity trading Lehman Brothers.

IBM slumped $2, to $49.75. Daniel Mandresh, an analyst at Merrill Lynch, cut IBM from his "long-term buy" list. IBM was also featured in yesterday's "Heard on the Street" column in the Wall Street Journal. Analysts were quoted as saying that the stock may fall farther.

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