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Dow Off Another 18.21, Drops 91.81 in a Week

June 30, 1989|From Associated Press

NEW YORK — Stock prices fell today, extending the slide of the last few sessions in selling blamed on spreading recession worries.

The Dow Jones average of 30 industrials dropped 18.21 to 2,440.06, stretching its loss for the week to 91.81 points.

That marked the biggest weekly drop for the average since it tumbled 108.42 points March 21-25, 1988.

Declining issues outnumbered advances by about 7 to 5 on the New York Stock Exchange, with 637 up, 894 down and 437 unchanged.

Big Board volume totaled 170.49 million shares, against 167.10 million in the previous session.

The NYSE's composite index lost .85 to 177.90.

The market has been under pressure since the government reported Wednesday that the index of leading economic indicators posted a larger-than-expected 1.2% decline in May.

More evidence of a drop in business activity came this morning with the news of a 2.5% drop in new factory orders in the same month.

Until recently, Wall Street has been welcoming news of slower growth in hopes of a "soft landing" that would allow for reduced inflation and lower interest rates without much harm to corporate profits.

In the last few days, however, investors have begun to look more closely at the possibility that the Federal Reserve might not be able to pull off that tricky mission, analysts believe.

As evidence, they noted that stocks lately have not responded favorably to continuing declines in open-market money rates.

Bond prices pushed ahead and interest rates receded further as the rally in the credit market continued to roll along today in light pre-holiday trading.

Bonds have been benefiting from a convergence of positive influences, including recurring strength in the dollar, signs of slower economic growth and, this week, an influx of funds from the stock market.

In trading this morning, the 30-year U.S. Treasury bond rose 5/8 point, or $6.25 per $1,000 in face value. The benchmark bond's yield, which moves in the opposite direction from price, declined to 8.05% from 8.09% late Thursday.

Marilyn Cohen, of the Beverly Hills-based brokerage Capital Insight, linked today's bond buying to Thursday's stock setback on Wall Street.

"The key has been the stock market action," Cohen said. "A lot of money has moved from the stock market into the bond market. Everybody woke up all of a sudden and said this economic slowdown may not be a soft landing and that might not be good for corporate earnings."

The dollar's strength has been a key force behind the bond market's advance in recent weeks. Increasing value in the dollar tends to draw money into such dollar-denominated holdings as Treasury bonds.

Meanwhile, more and more bond traders believe that the U.S. central bank is bound to ease credit conditions soon because of the weak signals the economy has been sending out lately.

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