Tax-Inspired Sales, Sagging Bond Market Sends Stock Prices Lower
John C. Given, Ap, THE JOURNAL RECORD
NEW YORK - Stock prices slipped broadly lower Tuesday, pressured by the sagging bond market and continued selling for tax purposes, analysts said.
The Dow Jones average of 30 industrial stocks closed at 1,908.61, down 3.51.
At the New York Stock Exchange, losers outpaced gainers by about 12-to-5, with 1,129 issues lower, 473 higher and 467 unchanged.
Volume on the New York Stock Exchange stood at 126.18 million shares, up from Monday's 99.80 million.
``The bond market was weak, and that undoubtedly had some effect on it. But things are usually dull this time of year anyway,'' said Alan C. Poole, an analyst at the Laidlaw, Adams & Peck securities firm.
On Monday, bonds had moved sharply lower amid concern over the falling dollar, fears of inflation - partly because of higher oil prices - and diminishing prospects for interest rate cuts.
This spilled over into the stock market, contributing to an 18.25-point loss in Monday's closing Dow Jones industrial index.
Johathan Dodd, and E.F. Hutton & Co. analyst said he thought stock traders were disappointed when no bond market rally materialized Tuesday morning.
``That would have given them hope,'' he said. Instead, ``There was very (upward) little action - it was just down. Bonds were down, oil prices were flat. It was a case of yearend cross-currents.''
Dodd, Poole and other analysts also suggested that the market was depressed by selling for tax purposes, as investors rushed to take advantage of capital gains rates that will rise with the new law taking effect Jan. 1.
Although settlement dates may now fall in 1987, traders who sell in the last five sessions of the year have the option of applying the capital gains to either 1987 or 1986, when the tax rate on such gains will be lower. …