Slump in bank shares drags Dow down 22.42


NEW YORK -- The stock market declined yesterday, led by a sudden slump in bank stocks and a burst of computer-driven sell orders.

The slide in stocks was attributed also to concern about whether President Bush can jump-start his candidacy for re-election.

The Dow Jones industrial average fell 22.42 points, to 3307.06, with International Business Machines, Walt Disney and United Technologies accounting for much of the decline.

Declining stocks outnumbered advancing issues more than 2-to-1 on the New York Stock Exchange.

The NASDAQ Combined Composite index fell 3.26 points, to 567.61, and Standard & Poor's 500 index declined 3.15 points, to 418.19. The Dow Jones transportation average fell 9.58 points, to 1258.05, led by a slump in AMR.

Bank stocks plunged around midday on concern about the possible impeachment of President Fernando Collor de Mello of Brazil. The fear is that an impeachment might cause an unraveling of a recent debt-reduction agreement with foreign banks, including major U.S. banks.

First Chicago fell 1 5/8 , to 34 1/8 ; Citicorp declined 1 1/8 , to 16 3/4 ; Chemical Banking slumped 1 3/8 , to 32 3/4 ; BankAmerica dropped 1 3/8 , to 43 1/8 ; Bank of Boston fell 1 5/8 , to 22; and Wells Fargo declined 1 3/4 , to 67 7/8 .

"President Bush holds the key to the stock market's future," said Barry Berman, head trader at Robert W. Baird & Co. "Bush speaks tomorrow [Thursday] at the Republican convention, and he better get the place jumping."

Mr. Bush is expected to propose tax cuts and changes in his Cabinet designed to strengthen the U.S. economy. Treasury Secretary Nicholas F. Brady, Budget Director Richard G. Darman and Michael J. Boskin, chairman of the Council of Economic Advisers, might be replaced, press reports indicated.

Mr. Bush needs to gain against Bill Clinton in the polls if stocks are to rise, Mr. Berman said. Mr. Clinton has held a lead over Mr. Bush of up to 20 percentage points in recent polls.

The Republicans are perceived as pursuing policies that are more favorable toward businesses than those proposed by the Democrats.

Stocks received some positive economic news yesterday. The Commerce Department said the merchandise trade deficit narrowed 7.7 percent in June.

An economic expansion abroad would drive up U.S. exports, and that ultimately would boost earnings, said Richard Hoffman, Cowen & Co.'s chief investment strategist.

Berlitz International rose 2, to 23 1/2 , on news that the company will sell a 67 percent stake to Fukutake Publishing Co. Ltd.

United Technologies slumped 1 1/4 , to 54 7/8 , after Bear Stearns removed the stock from its "strong buy" list because of concerns about a slowdown in sales of spare parts.

Walt Disney declined 1 3/8 , to 34 1/2 , after Morgan Stanley initiated coverage of Euro Disney with a "sell" recommendation.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad