Dow loses 30 points on interest worry

March 22, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks plunged yesterday amid concern that growth in the economy will push the Federal Reserve to raise interest rates at a policy meeting today, analysts said.

"It's hard to separate how much of this sell-off has been an unwinding of last week and how much is uncertainty about what the Fed will do," said Barry Berman, head trader at Robert W. Baird & Co. "It is a combination of the two."

Stocks gave back gains made in a late rally Friday, which was driven by a burst of computer-driven buy orders tied to the quarterly expiration of stock options and futures, known as triple-witching.

"When you have a triple-witching day, the Monday following usually shows a reversal in the market," said Anthony Dwyer, chief market strategist at Sherwood Research Group. After exercising options to buy stock late Friday, investors may have decided to sell shares yesterday, he said.

The Dow Jones industrial average fell 30.80, to 3,864.85, after rising 30.51 Friday. Chevron Corp., International Paper Co. and Minnesota Mining & Manufacturing Co. led the decline.

Chevron fell $1.875, to $90.875, after Dean Witter Reynolds analyst Eugene Nowak cut his first-quarter earnings estimates by 12 cents, to $1.30 a share. Shares of other oil companies fell, including Royal Dutch Petroleum, down $1.125, at $103.125, and Exxon Corp., down 37.5 cents, at $65.50.

The Standard & Poor's 500 Index fell 2.52, to 468.54. Integrated oil, telephone and tobacco companies were the worst performers. The American Stock Exchange market value index fell 2.19, to 470.77.

An announcement late in the day that Novell Inc. would acquire WordPerfect Corp. and the spreadsheet unit of Borland International failed to lift technology shares. Lotus Development Corp., for example, fell $3.75, to $80.25. The Nasdaq Combined Composite Index fell 6.63, to 797.30, after reaching an all-time high of 803.93 Friday.

Trading was light, with 250 million shares trading hands, fewer than the average 289 million traded daily over the past six months on the New York Stock Exchange. About 13 stocks fell for every five that rose on the Big Board.

Amtech Corp. was the most active stock. The shares fell $11.125, to $21.375, after toll-road authorities in New York, New Jersey, and Pennsylvania bypassed the maker of electronic toll collection systems in favor of a technology from Mark IV Industries Inc. After Amtech, the most active issues were Telefonos de Mexico, Imatron Inc., Baltimore Bancorp and Intel Corp.

Concern about the direction of interest rates worsened Friday after Fed Chairman Alan Greenspan canceled a speech near Houston to meet with President Clinton at the White House. The meeting prompted speculation over a rate increase.

The Fed's Federal Open Market Committee is scheduled to meet today to review monetary policy. The last time the Fed raised the fed funds rate, to 3.25 percent from 3 percent on Feb. 4, the Dow industrials plunged 96 points.

The yield on the 30-year Treasury bond rose to 6.94 percent from 6.90 percent Friday.

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