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FINANCIAL MARKETS : Dow Declines 15 in Sixth Straight Losing Session : Market Overview

April 27, 1993| Highlights of Monday's market activity, compiled from Times staff and wire reports:

The stock market suffered a broad slide amid deepening concern about the economy. Bank, brokerage, transportation and technology stocks led the decline.

* Short- and long-term interest rates moved up, as another plunge in the dollar and surging gold prices sparked inflation fears.

Stocks

After five straight losing sessions for the Dow industrials last week, there was nothing to improve investors' mood on Monday.

The Dow ended the day off 15.40 points to 3,398.37, but the broad market fared much worse: Losers outnumbered gainers by nearly 2 to 1 on the Big Board, and by a larger ratio on the NASDAQ market. Trading was heavy.

Sentiment was hurt by another downbeat economic report: The National Assn. of Realtors said sales of previously owned homes fell 2.9% in March, a far bigger drop than expected.

"The news is less than good," said Alfred Goldman, analyst at A. G. Edwards. "The (economic) recovery is there, but it is more sluggish than initially thought."

What's more, stock investors are spooked by the weakening dollar and by the surging price of gold, which soared another $6.30 an ounce on Monday, to $352.80.

Analysts are particularly troubled by the intensity of profit taking in many stocks that had led the market, including semiconductors and banks. The extent of the stocks' losses suggests a market driven almost entirely by short-term traders--which could mean that prices are vulnerable to much deeper setbacks.

Among Monday's highlights:

* The embattled NASDAQ market of smaller stocks took a major hit. The composite index tumbled 12.54 points to 645.87, a 1.9% drop. The index now is approaching its lowest point this year: 651.40, reached on Feb. 23 in the midst of the market selloff caused by pessimism over President Clinton's economic plan.

Intel led the NASDAQ lower. The semiconductor giant slid 5 1/4 to 87 3/8 on news reports that rival Motorola could start a severe pricing war in computer chips. Motorola lost 1 1/2 to 69 1/8, and tech stocks in general were sharply lower. Novell dropped 1 5/8 to 29 1/8, Cisco Systems lost 1 3/4 to 40 5/8, Microsoft fell 1 to 80 3/8, and Creative Technologies plunged 2 3/4 to 25 3/4.

* Bank and S&L stocks dropped for an eighth straight session, hurt by worries about rising interest rates and slower profit growth. Citicorp plunged 1 7/8 to 25 7/8, BankAmerica lost 2 7/8 to 44 1/4, First Interstate slumped 3 1/4 to 53 1/2, Boatmens Bancshares fell 2 to 56 1/2, and BancOne tumbled 1 3/8 to 53 3/8.

Among California S&Ls, Citadel Holding plummeted 6 to 12 5/8 on a dismal quarterly earnings report. Other losers included Coast Savings, off 1 to 13; Great Western, down 1 to 16 1/4, and Downey Savings, off 3/4 to 16.

* Brokerage and other financial stocks also tumbled. Primerica slumped 3 7/8 to 41 5/8, Merrill Lynch fell 1 5/8 to 69 1/4, Schwab gave up 1 1/4 to 31 1/2, and Federal National Mortgage sank 3 3/8 to 75.

* Airline stocks gave ground on new concerns about the economy. AMR, parent of American, fell 2 1/2 to 66 7/8, Southwest slumped 2 3/8 to 35, and Delta lost 1 1/4 to 56.

* Among Southland issues, hospital giant National Medical Enterprises eased 3/8 to 7 after trading as low as 6 3/4, its 52-week low. A research report by a small San Francisco brokerage, W.I.G. Securities, contended that NME's problems are so severe it may be forced into bankruptcy. NME vehemently rejected the report's conclusions.

* On the upside, some industrial stocks gained, including several that last week reported surprisingly healthy quarterly earnings. Caterpillar added 1/8 to 67, Kennametal rose 3/8 to 34 3/4, and Acme-Cleveland inched up 1/8 to 9 1/8.

Overseas, London's FTSE-100 index lost 21.5 points to 2,822.3, while Frankfurt's DAX index eased 7.29 to 1,649.81.

In Tokyo, the Nikkei index slipped 80.52 points to 19,623.63.

In Mexico City, the Bolsa index fell 26.14 points to 1,681.04.

Credit

Bond traders were troubled by an abrupt rise in both short- and long-term yields. While the increases weren't huge, the rise in short rates in particular was worrisome because those rates had been leading bond yields lower lately.

The discount rate on three-month Treasury bills jumped to 2.88% from 2.82% on Friday.

Meanwhile, the yield on the Treasury's 30-year bond rose to 6.83% from Friday's 6.79%.

The continuing fall of the dollar is raising fears about greater inflation from higher prices on imported goods. Also, the dollar's losses will make it tougher for the Federal Reserve to ease credit again, if the economy continues to weaken.

What's more, the powerful advance in gold prices Friday and Monday frightened many bond investors, who fear that the gold market sees inflation coming. Any increase in inflation from the low rates of recent years would be expected to drive interest rates up.

But James Fitzgibbons, investment strategist at Tokai Bank, said much of the concern over inflation isn't justified given recent lousy economic reports.

Even so, other analysts warned that bond yields could jump higher if the dollar stays weak and gold continues to rise. "Any way you cut it, there seems to be some flight to hard assets," said Dan Seto, an economist at Nikko Securities.

Other Markets

Russian President Boris N. Yeltsin's apparent victory in Sunday's referendum helped buoy European currencies, giving traders yet another reason to sell the embattled dollar.

By the close in New York, the dollar had tumbled to 1.568 German marks from 1.583 on Friday. Against the Japanese yen, however, the dollar settled slightly higher, at 110.60 versus Friday's 110.50.

In commodities trading, light, sweet crude oil for June eased 4 cents to $20.30 a barrel on the New York Merc.

Market Roundup, D8

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