Dow plunges 30 amid gloomy reports MARKETS

WALL STREET

June 24, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks tumbled to a five-week low yesterday amid economic reports showing durable goods orders declining for the third month in a row and anemic midmonth car sales.

The economic reports combined to paint a picture of sluggish growth, helping to drive down oil and bank stocks. Goods orders fell 1.6 percent in May against expectations for a 1.3 percent increase.

RJR Nabisco Holdings' decision to cancel a planned sale of stock in its Nabisco food business because of slack demand further exacerbated a midafternoon sell-off.

With oil and bank stocks among the day's worst victims, the session continued a trend toward "a kind of tug of war" among stock sectors, said Steven Goldman, market strategist at Weedon & Co.

The Dow Jones industrial average dropped 30.72 points, to a session low of 3,466.81, its lowest since May 18. Chevron, Disney, Dupont, Eastman Kodak and Texaco led the decline.

Among broader market averages, Standard & Poor's 500 Index was down 2.74 points, to 443.19, led by oil, chemical, media and bank stocks. The Nasdaq Composite was down 1.98 points, at 684.79.

Decliners outnumbered advancers 11-to-8 on the New York Stock Exchange. Trading was active for a second straight day, with about 260 million shares changing hands on the Big Board.

"What you're seeing is one group to the next group either weakening or strengthening" against a background of fewer stocks hitting 52-week highs or moving above 30-week moving averages, Mr. Goldman said. High valuations, as measured by price/earnings ratios, plus "a lack of leadership" from growth or cyclical stocks "are limiting the upside," Mr. Goldman said.

Further, investors also "can't decide what's going to happen" with the Clinton's administration's economic program, said Bradford Weekes, manager of sales trading at Donaldson, Lufkin & Jenrette.

More positively, "the bond market seems to be fine," said Mr. Weekes. Yields on the 30-year benchmark Treasury bond were unchanged yesterday, at 6.77 percent.

"Interest rates are still behaving," said Weedon's Mr. Goldman, despite a New York Times report that the Federal Reserve Board might move soon to nudge rates higher.

RJR's abandonment of the Nabisco sale was "a warning sign," said John Blair, head trader at NatWest Securities. "It's the first deal that hasn't gotten done."

RJR withdrew the sale of shares in RN-Nabisco Group after investors balked at paying the $17 to $19 a share the company was seeking. Demand for food and tobacco stocks has waned as the weak economy and competition combines to hold down prices, hurting profit margins.

Oil stocks fell after Kidder, Peabody & Co. lowered its recommendations of Texaco, Atlantic Richfield Co., Royal Dutch Petroleum, and Phillips Petroleum Co. over concern about falling crude prices.

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