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Wall St. Cuts Back Trading 2 Hours a Day; Dow Off 77 : N.Y. Blames Big Volume for Cutback

October 22, 1987|From Times Wire Services

NEW YORK — As stocks tumbled anew today in frantic U.S. trading, with the Dow Jones industrials closing 77 points lower, the New York Stock Exchange said it will shorten trading hours on Friday, Monday and Tuesday.

It blamed the move on the extremely heavy trading volume of the last four days--more than 1.2 billion shares have traded since Monday's historic market collapse--and said the exchange will close at 2 p.m. EDT on each of those days.

The New York Stock Exchange is normally open from 9:30 a.m. to 4 p.m. EDT.

Soon after the announcement, the American Stock Exchange said it was following suit.

Anxious traders today brought the key Dow average of 30 industrial stocks careening 140 points lower in early trading as sell orders swamped stockbrokers. The index recouped half the loss, then fell erratically throughout the day.

By the close, the country's best-known barometer of stock values settled at 1,950.43 down 77.42, according to a preliminary calculation. Volume was about 392.60 million shares traded. Losing stocks swamped gainers by a 5-to-1 margin on the New York exchange.

The blue-chip indicator had recovered 289.11 points of Monday's 508-point plunge in the two succeeding sessions.

The Federal Reserve continued to pump money into the nation's financial system today while analysts said that a new overture from President Reagan on budget and taxes could help calm the frenzy still gripping the nation's stock markets.

Major banks responded by lowering their prime lending rates from 9% to 9%, but the move had no immediate effect on the markets.

The market also was somewhat helped by the fact the NYSE asked major member firms to refrain from program trading for their own accounts until further notice to curb volume.

Escalating hostility in the Persian Gulf and swirling rumors that the market might crash again played important roles in the frenzied stock selling, brokers said. Trading volume was heavy, though nowhere near the extremes reached earlier in the week.

Brokers also attributed part of the decline to a massive migration into the bond market by panicky investors who wanted to put their money in a relatively safe place. Bond prices jumped as a result.

"The market's extremely fragile," said Peter J. DaPuzzo, manager of the retail equity group at Shearson Lehman Brothers Inc. in New York. "Any negative news causes it to break and people to sell out equities. There's so much tension and nervousness, the confidence level is very close to zero."

The money pouring into the government securities market pushed down yields sharply. The yield on the three-month Treasury bill fell to 5.19% by midmorning, down from 5.64% late Wednesday, and the yield on the 30-year Treasury bond fell to 9.15% from 9.45%.

The stock volatility indicated persistent nervousness among investors about the health of the world economy following the panic that began Monday and erased more than $1 trillion worth of stock value in 24 hours.

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