With the Federal Reserve Bank raising its discount rate one half point to 6% Friday, and the major banks immediately raising their prime rates to 8.75%, the stock market was not able to weather the storm of selling as most stocks fell before the three-day Labor Day weekend, according to Irving Katz, director of research at San Diego Securities.
Interest-rate sensitive stocks were particularly hard hit with Home Federal Savings and Loan down 1 1/2 to 32, Imperial Corp. of America down 1 1/8 to 14, Great American First Savings Bank, down 7/8 to 16 5/8, and San Diego Gas & Electric, down 1 3/8 to 32 5/8.
Especially losing ground were stocks popular with institutional investors who rushed for the exit. Rohr Industries which is 74.1% controlled by institutions was down 3 5/8, to 31 as none of the many buy-out rumors concerning Rohr materialized. Home Federal Savings & Loan which is 78.2% controlled by institutions was down as mentioned previously .
Other institutional favorites on the downside included Price Co., down 2 to 47 3/4, after a recent run-up from low 40s, and Beeba's Creations, down 1 1/2 to 16 1/2 after its recent run-up from 12.