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Dow Edges Up 3.52; Markets Mixed : New Record Posted Despite Profit Taking, Weaker Bonds

January 14, 1987|From Times Wire Services

NEW YORK — Stocks shuddered Tuesday because of profit takers and a decline in bond prices, but the Dow Jones industrial average hit a seventh straight record and analysts said the broader market showed resilience.

Although some other market indicators fell slightly and reflected a largely mixed showing, there was little evidence that the rally buoying Wall Street since the new year began would fade soon.

"There's too much buying power here. You just can't stop 'em," said Robert O'Toole, manager of over-the-counter trading at the New York investment firm of Shearson Lehman Bros.

The Dow Jones average of 30 industrials finished at 2,012.94, up 3.52. It was the seventh consecutive session that Wall Street's best-known barometer has reached a new high, coming despite a plunge in the stock of index component IBM.

On the New York Stock Exchange, 815 stocks advanced, 794 declined and 387 were unchanged. Big Board volume totaled 170.94 million shares, versus 184.22 million Monday.

Analysts said the market was affected by investors skimming profits and weakness in the bond market. Some Treasury issues were off by a half point, or $5 per $1,000 in face amount.

The credit markets were troubled by a tumble in the dollar's value, largely attributed to the realignment of European currency exchange rates. A cheaper dollar raises prospects for heightened inflation and higher interest rates, which would make bonds worth less.

IBM was the most notable loser in heavy trading, down 3 7/8 to 116 1/2, a 52-week low.

Analysts said IBM's plunge affected some other technology stocks. Hewlett-Packard fell 3/4 to 47, Cray Research dropped 1 1/8 to 93 5/8, and Control Data fell 3/8 to 25 1/2. But other high-tech stocks rose, principally those of IBM's chief domestic competitors. Unisys advanced 3/4 to 87 1/2, and Digital rose 1 5/8 to 118 1/2.

Owens-Illinois jumped 3 1/8 to 54 in reaction to a sweetened $60-a-share takeover offer for the company from the New York investment firm Kohlberg Kravis Roberts & Co. Owens-Illinois said it was evaluating the offer.

Oil stocks, which rallied Monday because of higher petroleum prices, fell on profit taking and fresh uncertainty about the future oil market. Texaco fell 1 to 37 3/4, Chevron fell 1/2 to 49 3/4, and Halliburton dropped 7/8 to 29 3/4.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,481, compared to 4,102.

Bond market analysts attributed the credit market's malaise largely to the plight of the dollar, which fell to record lows against several important currencies because of U.S. economic weakness and a government-imposed realignment in European exchange rates.

Bond traders fear that the dollar's depreciation will discourage the Federal Reserve Board from easing credit restrictions and could possibly lead the central bank to tighten credit, which would increase interest rates. Bonds and interest rates move inversely.

In the secondary market for Treasury bonds, prices of short-term governments fell about 1/8 point, intermediate maturities fell about 1/2 point, and long-term issues were down about 1/2 point, the financial information service Telerate Inc. said.

In corporate bonds, industrials were unchanged in moderate trading and utilities fell 3/8 point in moderate trading.

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