Dow drops 19.99 small stocks rise again


January 01, 1993|By Bloomberg Business News

NEW YORK -- Blue-chip stocks ended 1992 on a sour note as a flurry of computer-driven sell orders sent the Dow Jones industrial average lower in the final minutes of trading yesterday.

"Somebody decided to finish the year by dumping an entire portfolio," said Philip Smyth, market analyst at Birinyi Associates. "It was a broad-based program, with about 350 stocks affected."

Investors typically sell some stocks at the end of the year to reduce their tax burdens. Some of yesterday's sell orders were prompted by investors seeking to cash in profits ahead of expected tax increases in 1993, said Ted Weisberg, president of Seaport Securities.

"The selling was more frustrating than unusual," Mr. Weisberg said.

The Dow closed down 19.99, to 3,301.11. The slide was led by General Electric and American Telephone & Telegraph. For the year, the Dow rose 4.2 percent.

The NASDAQ index of smaller stocks avoided the troubles of the Dow to close at another all-time high. The NASDAQ rallied 5.10 yesterday, to 676.95, and rose 15.5 percent overall in 1992.

The Standard & Poor's 500 index fell 3.11 yesterday, to 435.71. Despite the slide, the S&P index rose 4.5 percent in 1992.

Advancing stocks outnumbered declining issues yesterday by about 3-to-2 on the New York Stock Exchange. Trading was moderate, with 166 million shares changing hands on the Big Board. The American Stock Exchange Market Value index gained 3.46, to 399.21.

"Nineteen ninety-two wasn't an easy year for fund managers," said Michael Metz, investment strategist at Oppenheimer & Co.

"The stock market was higher overall, but IBM single-handedly killed the performance of a lot of portfolios," he said. "The secret to success in 1992 was avoiding the disasters."

This year probably won't be much different, as the stock market continues to encounter problems, Mr. Metz said. Interest rates are low, but the recovery in corporate earnings is slow, he said, and many companies still need to cut costs drastically to revive their businesses.

In addition, concerns about Japan are likely to hurt U.S. stocks, said William Lord, senior vice president in equity trading at Lehman Brothers. "Japan really worries me," he said. "I think you could have a depression over there."

"Bankruptcies were up something like 28 percent in 1992," Mr. Lord said. Japan's stock market in 1992 suffered its worst year in almost three decades, as the Nikkei 225 index fell to its lowest point since 1986, declining 26.4 percent, to below 17,000.

"I think you're going to see a lot of worrying headlines about Japan in 1993, and that's going to hurt U.S. stocks," Mr. Lord said.

Stocks received a lift from the Labor Department's report that fewer workers filed first-time jobless claims in mid-December, a sign that labor markets are improving.

International Business Machines Corp., Citicorp, RJR Nabisco, Ameribanc Investors Group and Westinghouse Electric were the five most actively traded issues.

IBM rose 25 cents, to $50.375. IBM has fallen 49.8 percent from its 52-week high in July. The computer maker announced plans last month to take a $6 billion charge in the fourth quarter to cut 25,000 jobs and consolidate manufacturing in 1993. IBM also said it might cut its once-sacrosanct dividend.

Citicorp rallied 62.5 cents, to a 52-week high of $22.25. The nation's biggest bank was mentioned in American Banker as one of many banks expected to report better fourth-quarter results. Separately, S.G. Warburg & Co. chose Citicorp as one of the top picks for 1993.

Cytogen fell 25 cents, to $22, in NASDAQ trading. Cytogen had been rallying on news that the Food and Drug Administration gave the company approval to market its cancer-imaging agent. The company said it expects to launch the OncoScint products in early 1993.

Westinghouse Electric increased 50 cents, to $13.375. Westinghouse's stock has risen 33 percent since the company announced plans to sell its financial services business and four other divisions.

Eastman Kodak rose 25 cents, to $40.625. The company said it would sell the high-technology education-and-training facility as part of its efforts to focus more on core businesses.

Midlantic slumped $1.875, to $19.875, in NASDAQ trading as the company completed its 18-month restructuring by closing the sale to ONBANCorp.

W.R. Grace & Co. rose 62.5 cents, to $40.25, after the company said it would sell Grace Petroleum to an undisclosed buyer for $125 million.

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