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Dow Dives 47.08; Market Rocked by One-Two Punch

December 11, 1987|From Times Wire Services

NEW YORK — The stock market skidded late Thursday, weighed down by a tumbling dollar and bonds after refusing to be panicked earlier in the face of another unpleasant surprise on the nation's trade deficit.

The Dow Jones industrial index closed 47.08 points, or 2.47%, lower at 1,855.44. The index had risen 135.78 points in the week's first three trading days. Big Board volume totaled 188.96 million shares, down from Wednesday's 231.43 million.

The seesaw session began with a fall of about 50 points, but then it bounced back to a gain of about 15 points at midday, and finally took a steep slide at the end of the day.

The stock market for awhile appeared to have shrugged off the trade figure--a much larger than expected $17.63-billion shortfall--and allowed the momentum of the past three days to carry it higher.

"Blue chips recovered nicely but the dollar dragged us back down," said Ralph Acampora of Kidder, Peabody & Co.

Traders threw in the towel late in the day as the steady rise of credit market interest rates and the further decline of the dollar to new lows drew away support.

The dollar closed at a postwar low of 1.6325 West German marks, compared to 1.6620 marks at Wednesday's close. Against the Japanese yen, it fell to a postwar low of 129.05 yen, down from 132 before the news and 132.20 on Wednesday.

Treasury bond prices also took a beating on the news. The benchmark 30-year bond ended down more than a point, pushing the yield to 9.39% from 9.21% at Wednesday's close. It was the highest yield since Oct. 21.

The gaping size of the trade deficit surprised even the most negative economic forecaster and lowered hopes that the U.S. trade outlook was beginning to turn around. The record deficit came when most economists had expected a $14.6-billion shortfall.

Already Sold Out

Concern over world trade imbalances has been cited as a primary force behind the stock market's steep decline since last summer.

"The foreign investors who might have sold on this news are basically sold out already," said Suresh Bhirud, an analyst at Oppenheimer & Co. "The market is finally beginning to look beyond one month" on the trade figures, he added.

Point-plus losers among the blue chips included International Business Machines, down 3 at 111; American Telephone & Telegraph, down 1 3/8 at 27 1/8; General Electric, down 1 1/8 at 42 3/4; Eastman Kodak, down 1 1/2 at 46 3/8, and Ford Motor, down 2 3/8 at 73.

Metals Issues Gain

Precious-metals stocks chalked up some of the day's best gains as the price of gold for December delivery climbed $7.80 to $492.30 an ounce on the Commodity Exchange in New York.

ASA Ltd. rose 2 5/8 to 52 3/8, Battle Mountain Gold gained 1 1/2 to 20 5/8, Hecla Mining rose 1 1/2 to 15 and Sunshine Mining rose 1/2 to 4 5/8.

Declining issues outnumbered advances by more than 2 to 1 on the Big Board.

In London, share prices finished sharply lower.The Financial Times-Stock Exchange 100-share index fell 19.7 points to close at 1,619.6.

Stock prices rose on the Tokyo Stock Exchange. Wall Street's strength this week plus expectations that the U.S. October trade data would be favorable sent the Nikkei index up 395.14 points, or 1.7%, to close at 23,280.84.

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