Stocks fall on inflation fears Dow off 29


March 13, 1993|By Bloomberg Business News

NEW YORK -- Stocks slumped yesterday for a second straight session amid concern that inflation might be turning higher after a two-year decline.

Stocks were also sent lower by news that President Boris N. Yeltsin of Russia was losing power to deputies who were elected three years ago under the Communist system.

The Dow Jones industrial average fell 29.18, to 3,427.82. The Dow rebounded from a session low of 3,403.77 in the final two hours of trading.

Stocks fell from the opening bell. The slide was fueled by the Labor Department's report that prices paid by wholesalers climbed 0.4 percent in February, the biggest jump in inflation at the producer level since November 1990.

"We're probably not going to see a rapid acceleration in inflation, but the best news is behind us," said Robert Dederick, chief economist at Northern Trust.

In the first half hour of trading, the Dow fell 50 points, triggering the New York Stock Exchange's "uptick rule," which limits computer-driven sell orders. Stocks stabilized somewhat after the opening.

The Standard & Poor's 500 index declined 3.89, or 0.86 percent, to 449.83, and the Nasdaq Combined Composite index fell 1.50, to 692.78. The American Stock Exchange Market Value index lost 1.22, to 421.09.

Declining common stocks outnumbered advancing issues by about 11-to-4 on the New York Stock Exchange, led by a slide in oil, telephone, electric, food and beverage stocks. Trading was less active than usual, with about 255 million shares changing hands.

The fall in stocks was fueled by a 1 3/8 -point decline in the 30-year Treasury bond, to yield 6.86 percent, the highest level in two weeks.

Stocks were also hurt by growing tension in Russia, where the Congress of People's Deputies voted to strip Mr. Yeltsin of his power to institute reform by decree.

"The combination of inflation and Russia crunched stocks," said Daniel Marciano, vice president in charge of trading at Dillon, Read & Co.

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