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FINANCIAL MARKETS : Small Stocks Dive; Bond Yields Ease

March 29, 1994|From Times Staff and Wire Services

Stocks closed broadly lower Monday in a selloff led by smaller issues and other recent market leaders.

In the bond market, long-term yields slipped from Friday's 10-month highs, as oil and other commodity prices tumbled.

The stock market had a rough day as selling that had clipped blue-chips on Friday spilled into smaller stocks. The Nasdaq composite index of mostly smaller issues dove 10.95 points, or 1.4%, to 772.50.

The Dow industrial average, which fell a total of 95 points last Thursday and Friday, continued to give ground early Monday, and by midday the index was off more than 46 points.

But buyers returned later in the day, and the Dow closed down 12.38 points at 3,762.35. That is just slightly above where it finished 1993, at 3,754.09.

Traders said blue chips were pulled up by a recovery in the bond market. The yield on 30-year Treasury bonds, which crossed the 7% level Friday for the first time since last May, eased to 6.97% at the close, as falling commodity prices dampened inflation worries.

Still, the stock market's weakness was pervasive. Losers outnumbered winners by 12 to 5 on New York Stock Exchange and by 19 to 8 on Nasdaq. Volume, however, was only moderate at 287 million shares on the NYSE.

Wall Streeters say the stock market's bearish turn last week reflected rising interest rates and a host of political concerns, including the widening reach of the Clinton Administration's Whitewater scandal, the assassination of Mexico's probable future president and saber-rattling by North Korea.

But some analysts say that if long-term bond yields can hold below the 7% level, the stock market could mount a new rally.

"My sense is that the bond market is trying to settle down, and stocks are probably completing this selloff," said Peter Canelo, chief investment strategist at NatWest Securities in New York.

Wall Street got an unexpected windfall of good news in plummeting commodity prices Monday. Higher commodity prices recently have fanned inflation worries, helping to push interest rates up.

On Monday, oil sank more than $1 a barrel after OPEC failed to agree on new production cuts. And the Commodity Research Bureau index of key commodities, which hit a four-year high last week, slid 3.19 points or 1.4% to 227.56.

Metals were among commodities hit by selling Monday. Gold futures for current delivery lost $3 to $388 an ounce on the Comex; silver fell 10.2 cents to $5.68.

Among Monday's stock market highlights:

* The Nasdaq market was slammed by a selloff in technology stocks, many of which had been market leaders this year. Losers included KLA Instruments, off 5 1/8 to 34 5/8; Lotus Development, off 3 to 73 1/4; Xircom, down 2 1/4 to 22 1/2; Merisel, off 1 5/8 to 18 3/4; and America On-Line, down 3 1/8 to 81 1/2.

* Among bigger tech stocks hit by profit-taking, Computer Associates dropped 3 1/8 to 32 7/8, Texas Instruments fell 1 3/4 to 78 1/2 and Micron Technology lost 2 7/8 to 82 3/4.

* Many industrial issues also were lower. PPG Industries fell 2 1/8 to 74 3/4, Kennametal dove 2 1/4 to 53 5/8, Caterpillar fell 2 5/8 to 114 and Inland Steel was off 1 1/8 to 32 5/8.

* Energy-related stocks dropped with oil's price. Chevron sank 1 1/4 to 88 1/4, Atlantic Richfield tumbled 3 to 98, Halliburton was off 1 3/8 to 31 and Enron dropped 1 3/8 to 31.

* Brokerage stocks lost ground on fears about the bull market's longevity. Merrill Lynch fell 7/8 to 39 1/8, Schwab sank 1 to 29 3/8 and Dean Witter slumped 1 3/8 to 34.

* On the up side, beaten-down utility stocks got a sudden boost from the drop in interest rates and from lower oil prices. Commonwealth Edison surged 1 1/4 to 26 1/2, Houston Industries gained 3/4 to 36 7/8 and Peoples Energy added 1/2 to 29 3/4.

* Some food issues also rallied. Campbell Soup gained 1 3/4 to 40, Quaker Oats added 1 to 63 and Kellogg was up 5/8 to 50 5/8.

In foreign markets, Mexico City stocks slumped again on investor nervousness over who will be named by the ruling PRI party to replace slain presidential candidate Luis Donaldo Colosio. The Bolsa index dropped 74.63 points to 2,446.15. NYSE-traded Telmex shares fell 1 7/8 to 60 5/8.

Elsewhere overseas, Tokyo's Nikkei average closed up 105.31 points at 19,941.79, while Frankfurt's DAX index jumped 31.36 points to 2,161.42. In London, the FTSE-100 index was up 0.5 point to 3,129.5.

Market Roundup, D8

DAILY DIARY / March 28, 1994

Dow Jones Industrials

High: 3,793.45

Close: 3,762.35

Low: 3,719.74

New York Volume: 287.36 million

Interest Rates:

30-year T-Bond: 6.97%

1-year T-Bill: 4.36%

DOW 30: -12.38; 3,762.35

S&P 500: -0.58; 460.00

NYSE: -0.79; 255.50

NASDAQ: -10.95; 772.50

WILSHIRE: -25.587; 4,614.9444

AMEX: -6.22; 462.21

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