Newspaper article THE JOURNAL RECORD

Stock Market Slips to Broad Loss amid Heavy Trading

Newspaper article THE JOURNAL RECORD

Stock Market Slips to Broad Loss amid Heavy Trading

Article excerpt

NEW YORK (AP) - Stocks skidded to a broad loss Tuesday in the heaviest trading in nearly five weeks.

Much of the decline came in the afternoon and reflected futures-related trading by several brokerage houses, analysts said. Last-minute buying lifted prices above their worst levels, however.

The Dow Jones average of 30 industrials dropped 5.82 to 1,333.45, erasing its 3.58-point gain on Monday.

Losers overall swamped gainers by more than 2 to 1 on the New York Stock Exchange, whose composite index fell 0.80 to 108.32.

Big Board volume swelled to 104.73 million shares from 89.85 million in the previous session. It was the first time since Aug. 8 that activity exceeded 100 million shares.

The index-related trading, known as ""program trading,'' is part of complex strategies brokerage firms use to profit on the difference in price between various stock indexes and futures contracts on those indexes.

The programs have been used increasingly over the past few months, and have added unpredictable volatility to the market, especially when trading is otherwise quiet.

Such was the case Monday, when the brokers bought the futures contracts and sold many of the stocks comprising the indexes in order to take advantage of their price spread.

Before the programs hit the market, stock prices had been holding at slightly lower levels amid investors' continued uncertainty about the economy's outlook.

""There was really nothing going on, and in markets like this the sell programs loom larger than life and there's no buying to offset them,'' said Hildegarde Zagorski, second vice president of Prudential-Bache Securities Inc.

In the absence of economic developments, takeover-related and other special-situation stocks also continued to dominate Wall Street's attention. …

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