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FINANCIAL MARKETS : Dow Off 10.93; Early Attempt at Rally Fails

September 30, 1987|From Times Wire Services

NEW YORK — Stock prices fell Tuesday, pulling the Dow Jones industrial index below the key 2,600 level as investors were disheartened by sharp losses in the bond market and ignored the dollar's big gains.

The Dow Jones industrial index dropped 10.93 points to 2,590.57, erasing about a third of Monday's 31-point gain.

Declining issues outnumbered advances by about 3 to 2 in the overall tally on the New York Stock Exchange.

Stock prices started out moderately higher due to the dollar's strength in foreign exchange, traders said, but a weak bond market and rising interest rates held back an advance.

Also contributing to Tuesday's pullback were some profit-taking from the previous session's strong finish and late-afternoon futures-related program selling, traders said.

Program trading is a strategy in which professionals using computer programs play off differences between futures options and their underlying "baskets" of stocks.

Interest rates moved higher Tuesday, with the yield on the Treasury's bellwether 30-year issue rising to 9.82% from 9.66% on Monday as the credit markets braced for an onslaught of new bonds and notes to be auctioned this week.

As rates move higher, stockholders worry that investors may pull their money out of stocks and into higher-yielding bonds and that future corporate earnings could be hurt.

"We don't think it's anything serious," Ralph J. Acampora, a technical analyst for Kidder, Peabody & Co., said of Tuesday's stock slump.

"The market itself is in a strong mode. It's also digesting the big gain we had yesterday."

Arco Chemical led the NYSE active list, rising 3 7/8 from the offering price to 35 7/8, in its first trading day. The stock was put on the market by parent Atlantic Richfield at 32. Atlantic Richfield rose 5/8 to 94 3/8.

Salomon jumped 2 1/8 to 36 7/8 in active trading. Revlon Chairman Ronald O. Perelman offered to buy the same 12% stake in Salomon that investor Warren E. Buffett already has agreed to purchase.

Among actively traded blue chips, IBM was down 2 to 150 1/2, AT&T dipped 1/8 to 34 3/8, American Express was up 7/8 to 35 5/8 and Exxon was unchanged at 49.

In lighter trading, Ford fell 2 1/2 to 95 7/8 following the death of Henry Ford II, grandson of Ford's founder and a former chairman of the auto maker.

Big Board volume fell to 173.53 million shares from 188.07 million shares in the previous session. The NYSE index fell 0.68 to 180.06.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 201.22 million shares.

In Tokyo, stocks rose for the fifth consecutive session, spurred by a stronger dollar and Monday's gains on Wall Street, brokers said.

The widely watched Nikkei 225-share market index gained 160.66 points to 25,998.00 on Tuesday, down from 26,084.96. Advances led declines by 5 to 4 on volume of 1.2 billion shares.

In London, the 100-share Financial Times stock exchange index finished up 0.2 points at 2,368.3 after reaching a high of 2,375.9.

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