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Small Stocks Plunge Again; Gold Stabilizes

September 09, 1993|From Times Staff and Wire Reports

Market Overview * Small-company stocks led Wall Street lower for a second day Wednesday, though bargain hunters jumped in late in the session.

* The 30-year Treasury bond yield hit another historic low, while gold inched up after Tuesday's plunge.

Stocks

Profit takers swarmed in the stock market for a second day as worries about the economy's slow pace weighed on investors.

The Dow industrials lost 18.17 points to 3,588.93, following Tuesday's 26.83-point drop.

Also for a second day, the heaviest selling was reserved for smaller stocks. The NASDAQ composite index tumbled 8.62 points to 730.73, bringing its two-day loss to 2.5%.

But traders noted that buyers entered the market late in the day, pulling the NASDAQ index up from a loss of more than 13 points.

Still, losers topped winners by 2 to 1 on the NASDAQ market and by nearly 3 to 1 on the New York Stock Exchange, in heavy trading.

Though many analysts agree that the market was ripe for a correction after its August surge, "this was a little worse than most people expected," said Stephen Shobin, technical analyst at Lehman Bros.

But he said the market still looks poised to push higher after the latest selling dies down.

Among Wednesday's highlights:

* Health care stocks plummeted on word of federal cuts in Medicare premiums to health maintenance organizations--the latest blow to the beleaguered medical industry.

The HMO shares led the decline, but other medical stocks also fell. Among drug issues, Schering-Plough fell 1 1/4 to 60 1/4, Pfizer tumbled 1 3/8 to 62, Merck sank 1/2 to 31 3/4, Warner-Lambert gave up 1 5/8 to 67 1/4 and Upjohn lost 1 to 27.

Also in the group, medical supply firm Baxter International plunged 3 3/8 to 23 after warning of lower quarterly results.

* Many of the telecommunications and computer networking stocks that were high-fliers in August continued to sell off. IDB Communications fell 4 3/4 to 47 1/4, Qualcomm tumbled 5 to 71 3/4, Newbridge Networks dropped 4 5/8 to 62 and Synoptics dropped 1 1/8 to 24 1/2.

* Retail stocks also were weak. Ann Taylor tumbled 3 1/2 to 23 1/2 after saying third-quarter earnings will be at the low end of expectations. Elsewhere, Price Co. fell 1 3/8 to 35 1/2, Smart & Final lost 3/4 to 14 and J.C. Penney eased 5/8 to 40 3/8.

* Industrial issues were mixed. Alcoa fell 1 3/8 to 71 5/8 and GE lost 3/4 to 96 1/4, but Dupont added 1 to 48 3/8 and Nucor jumped 2 5/8 to 90 3/4.

Overseas, most markets reacted calmly to Wall Street's turmoil. London's FTSE-100 index eased 3.2 points to 3,035.4 and Frankfurt's DAX slipped 0.67 point to 1,885.29.

In Tokyo, the Nikkei average lost 43.91 points to 20,918.19.

In Toronto, however, a strong selloff continued. The TSE-300 index slid 70.84 points to 3,952.87, for a two-day loss of 173 points.

Other Markets

The bond market's stunning 1993 rally drove ahead, pushing the yield on the Treasury's 30-year issue to 5.86% from 5.89% on Tuesday. The new yield is another historic low for the bond since it began trading actively in 1977.

But short-term rates failed to follow the bond yield lower, for a second day.

In precious metals trading, gold rose modestly after traders failed to push the metal below $350 an ounce, following Tuesday's $14.40-an-ounce drop.

Near-term gold futures closed at $351.20 an ounce, up $1.10. But silver fell 4.3 cents to $4.22. Experts say the weak economy could send metal prices lower before they rebound.

Oil prices also stabilized. October light, sweet crude eased 4 cents to $17.03 a barrel after tumbling 66 cents Tuesday on new supply fears.

Dow Jones Industrial, Sept. 8, 1993: High: 3,623.331, Close: 3,588.93, Low: 3,561.27

New York Volume, Sept. 8, 1993: 283.19 million shares

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