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Stocks Slide After Short Early Rally : Retail, Auto Issues Among Casualties; Dow Declines 11.43

August 23, 1985|From Times Wire Services

NEW YORK — The stock market's bid to extend a brief upswing fell apart Thursday as prices tumbled in moderate trading.

Retail, auto, computer, drug and financial issues were among the major casualties.

The Dow Jones average of 30 industrials skidded 11.43 to 1,318.10, erasing most of its 17-point gain over the two previous sessions. The Dow Jones transportation average, which had soared 16.50 points Wednesday, gave back 9.71 to 686.33.

Declines overall led advances by about two to one on the New York Stock Exchange, whose composite index lost 0.92 to 108.57.

Volume Edges Down

Big Board volume totaled 90.60 million shares, against 94.88 million Wednesday.

Prices opened with a small gain but drifted into negative territory at mid-session, with the slide gaining momentum in the final hour.

The moderate gains earlier this week had sparked a debate on Wall Street as to whether the upturn, which was led by the blue chips and other market favorites, had staying power.

Some observers said it appeared that the so-called secondary stocks were joining with the large-capitalization issues in moving higher, which they considered a bullish sign.

But many analysts contended that the advance was little more than a technical rebound from the market's lackluster showing earlier this month.

"What we had over the prior two days was nothing more than an oversold, knee-jerk rally," asserted Alfred E. Goldman, vice president of A. G. Edwards & Sons in St. Louis. "Even a die-hard bull has to be disappointed that on only day three of a (upward) bounce, the market totally gave up the ship."

Additional Concern

In terms of business fundamentals, investors remain frustrated that the economy has not yet shown signs of a substantial recovery from its sluggish performance in the first half of 1985, brokers said.

They said there was additional concern after the Commerce Department reported that new factory orders for durable goods fell 2.8% in July, the biggest drop since March. In a separate report, the Labor Department said consumer prices in July edged up 0.2% for the third consecutive month.

Jack Eckerd jumped 4 to 30 1/2 and topped the NYSE's active list. The drugstore operator said Wednesday that it was considering selling the chain or merging with another company.

SCM rose 1 1/8 to 64 1/8 in heavy trading one day after receiving a $60-a-share takeover bid from the British company Hanson Trust PLC.

Aviall spurted 3 7/8 to 23. After the close, Aviall said it had agreed to be acquired by Ryder System for $25 a share. Ryder fell to 28 7/8.

On the downside, drug stocks were notable losers. Upjohn fell 2 1/2 to 106 3/8, Humana was off 1 1/8 at 30 3/8 and Pfizer lost 1 1/8 to 48 1/2.

Among the blue chips, International Business Machines dropped 1 3/4 to 126 5/8, General Motors fell 1 to 67 and International Paper lost 1 to 48 1/2.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 111.11 million shares.

Large blocks of 10,000 or more shares traded on the NYSE totaled 1,823, compared to 2,004 on Wednesday.

The Wilshire index of 5,000 equities closed at 1,939.071, down 15.397.

Indexes Drop

Standard & Poor's index of 400 industrials fell 2.15 to 208.07, and S&P's 500-stock composite index was down 1.80 to 187.36.

At the American Stock Exchange, the market-value index dropped 0.92 to 231.29.

On the Amex, Ozark Holdings climbed 7/8 to 12 as the most-active issue.

The NASDAQ composite index for the over-the-counter market closed at 296.85, down 0.80.

In the bond markets, prices were narrowly mixed as short-term interest rates generally dipped lower.

The market showed little reaction to the Federal Reserve's report of another increase in the nation's basic money supply.

The central bank said the money supply, called M1, rose $900 million in the week ended Aug. 12 to a seasonally adjusted average of $603.1 billion. The increase was in line with market expectations.

Short-Term Bonds Slip

In the secondary market for Treasury bonds, prices of short-term governments slipped 2/32 point, intermediate maturities were off 1/32 point and long-term issues were up 5/32 point, according to the investment firm of Salomon Bros. The movement of a full point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

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