Dow Drops 41 as Stocks Continue Slide With BC-Wall Street-Glance
NEW YORK (AP) _ Stock prices fell sharply Tuesday in what was widely viewed as a continuation of Friday’s 120-point fall.
Analysts said the heavy selling came amid growing frustration over Washington’s mishandling of the economy.
The Dow Jones average of 30 industrials, down more than 75 points in early afternoon, recovered slightly to close down 41.15 points at 2,931.57.
The sharp drop triggered a ″circuit breaker″ at the New York Stock Exchange, which restricts computer-driven program selling when the average falls at least 50 points. The rule was designed to prevent declines from accelerating and was put in place after the 1987 stock market crash.
The Dow on Monday gained 29.52 points after falling 120.31 points on Friday, the worst decline in two years.
″This is a follow through from last Friday,″ said Edgar Kam, a stock market analyst for Ernst & Co. ″(Monday) was a reflex rally, so to say.″
Kam said Monday’s market was deceptive: Though the Dow average advanced modestly, losing stocks far outstripped advancing ones in the broader market.
The broader market was hit again Tuesday. Declining issues outnumbered advances by about 4 to 1 on the New York Stock Exchange.
Big Board volume totaled 241.38 million shares as of 4 p.m., against 238.17 million in the previous session.
The most actively traded issue on the NYSE was Glaxo Holdings, down 1 at 28 3/4 . American Telephone and Telegraph fell 1 1/4 to 35 , Telefonos del Mexico dropped 1 3/8 to 42 1/8 and Phillip Morris dipped 5/ 8 to 68 3/8 .
Despite the overall downward trend, U.S. Bioscience reported a dramatic gain. The company rose 7 1/2 at 47 1/8 on the American Stock Exchange after it acquired rights to market an anti-cancer agent in western Europe.
Market analysts blamed the sell-off largely on continued nervousness about the economy and a belief stock prices remain too high amid languid economic conditions.
″People are more nervous now because of the declines experienced over the last four days, especially the biotech stocks,″ said Walter Murphy, senior international market specialist for Merrill Lynch & Co.
A new economic report released Tuesday didn’t cheer sour investors. The government said the U.S. trade deficit grew to $6.79 billion in September.
Remarks from President Bush that he was sticking by his decision not to offer an economic revival plan until January added to investor worries.
″Washington has not exactly inspired confidence on any front - the president or the Congress,″ said Mary Farrell, a first vice president at PaineWebber Inc.
Some economists and bankers said the Senate’s passage of a cap on credit- card interest rates last week was partially to blame for Friday’s sharp fall.
Over-the-counter-stocks took a beating. Farrell said decline was expected because the smaller issues had performed better than large blue chips during the year and were ready for a correction.