Stocks skid again, fall 26.24 points


NEW YORK -- U.S. stocks skidded yesterday for a second day as a Federal Reserve effort to bolster the dollar failed to offset concern about an imminent increase in interest rates.

Also hurting stocks was a weak bond market, where the 30-year Treasury yield climbed to 8.09 percent, up from 8.06 Tuesday and a 2 1/2 -year high.

Mounting evidence of rising inflation led some investors to believe the Fed will raise rates when its policy-making committee meets Nov. 15. That was enough to erase the gains stocks made after the central bank starting buying dollars and selling Japanese yen and German marks.

"If rates go up, it's bad for all stocks," said Kurt Feuerman, who manages about $1 billion at Morgan Stanley Asset Management.

The Dow Jones industrial average sagged 26.24, to 3,837.13, after seesawing throughout the day. Declines in Aluminum Co. of America, Du Pont Co. and Eastman Kodak Co. led the average to its lowest point since Oct. 10.

The Standard & Poor's 500 index fell 1.91, to 466.51, as chemical producers, media companies and electrical equipment manufacturers slumped. The Nasdaq combined composite index closed 0.37 lower, at 771.82. Tele-Communications Inc. and Novell Inc. were the biggest decliners.

Trading was active, as 333 million shares changed hands on the New York Stock Exchange. About four stocks fell for every three that rose on the Big Board.

Stocks partly recovered from earlier losses when the central bank stepped into the currency markets after the dollar fell below a post-World War II low of 96.17 yen. The dollar ended up 0.92 yen, at 97.52 yen; and it was up 2.03 pfennigs against the mark, to 1.5146 marks.

By bolstering the dollar, the Fed eased somewhat the concern that the central bank will raise rates aggressively to combat inflation. A weak dollar raises the prospect of higher inflation by making imports more expensive.

The Fed's action was not enough to stem losses in stocks and bonds. A slew of economic reports convinced some investors that the Fed will raise rates a sixth time this year when the Federal Open Market Committee convenes in two weeks.

Looking ahead, analysts said investors are waiting for tomorrow's Labor Department report on U.S. employment for more concrete signs of what the Fed might do at its policy meeting.

OfficeMax Inc. was the most active U.S. issue, followed by shares of Novell Inc., Snapple Beverage Corp., Tele-Communications Inc. and Cisco Systems.

Shares of Quaker Oats Co. skidded $7.375, to $67.125, after the food company agreed to acquire Snapple for $14 a share. Snapple shares fell 50 cents, to $13.75.

OfficeMax Inc.'s initial public offering of 33 million shares rose $5.625, to $24.625. The company operates more than 300 stores selling discount office products.

Chiron Corp. shares plunged $2.50, to $62.25, after some people who took the biotechnology company's Betaseron drug for multiple sclerosis experienced negative side effects, the Wall Street Journal reported.

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad