Dow Drops 23 as Traders Cash In : Market Overview

- Blue chip stocks closed sharply lower as traders cashed in on the market’s recent run-up. The Dow Jones average of 30 industrials shed 22.96 points to close at 3,414.58.

- Treasury bond prices ended slightly lower after rallying on a strong auction and then selling off in the face of good retail news.

Stocks

Declining issues outnumbered advancing ones by about 12 to 7 on the New York Stock Exchange. Volume on the floor of the Big Board came to about 239.96 million shares, down from about 243.40 million in the previous session.

Overseas equities markets declined overnight, setting the stage for a weak start on Wall Street. Shortly after the opening bell sounded, computer-triggered sell programs kicked in, sending the market lower immediately.

Although prices held to a relatively narrow range for most of the session, the Dow dipped further in the final hour, tumbling nearly 30 points before recovering somewhat.

Analysts weren’t particularly concerned about the selling, which they described as orderly.

Among the trading highlights:

- Auto stocks were pushed lower by profit taking. Analysts downplayed product liability questions that have plagued General Motors after last week’s $105-million jury award to the family of a teen-ager whose GM truck crashed and exploded in 1989. GM slipped 1/2 to 38 3/8; Chrysler was off 1 1/4 at 39 1/4, and Ford lost 1 1/8 to 48 7/8.

- Whirlpool, which reported better than expected earnings, jumped 2 7/8 to 51 5/8.

- Pharmaceutical issues, which have been battered, were narrowly mixed. Merck was up 5/8 to 39 1/8; Bristol-Myers Squibb was off 1/4 to 58 1/4; Abbott Labs gained 3/4 to 27 3/8, and Eli Lilly lost 1/8 to 54 3/8.

- Among other actively traded Big Board issues, IBM added 1/2 to 53 3/8; Citicorp was down 1/4 to 25 3/4; RJR Nabisco lost 1/4 to 8 1/2; Philip Morris fell 1 1/4 to 73 1/4, and Mattel lost 1 1/8 to 22 5/8.

In overseas trading, London’s Financial Times stock exchange index of 100 leading shares ended up 7.1 points at 2,870.

In Frankfurt, the 30-share DAX index ended 0.4% higher at the day’s peak of 1,647.16, the highest close since July 23.

In Tokyo, the 225-share Nikkei average fell 51.17 points, or 0.30%, to 17,281.73.

Credit

The price of the Treasury’s main 30-year bond was down 1/8 point, or $1.25 per $1,000 in face amount. Its yield rose to 7.20% from 7.19% on Monday.

“It was a little bit of an erratic day,” said Michael Moran, chief economist with Daiwa Securities Inc.

In the first auction of the Treasury’s three-leg quarterly refunding, yields on three-year notes fell to the lowest level since August. A total of $15.65 billion in notes was sold with bids totaling $43 billion.

“After the auction, the market did better,” Moran said, amid “a sign of strong bidding.”

Later, Johnson Redbook figures showed that sales at the nation’s retailers rose 3.7% in the first week of February over the previous month.

A strong economy lessens the likelihood that the Federal Reserve will lower interest rates.

The federal funds rate, the interest on overnight loans between banks, was 2.88%, down from 2.94% late Monday.

Currency

The dollar fell against the Japanese yen Tuesday and was mixed against other currencies amid speculation that the Clinton Administration may push for a stronger yen to help reduce Japan’s trade surplus.

Currency traders said developments in the Tokyo markets overnight set the stage for the dollar’s decline against the yen in the New York session.

Curtis Perkins, a trader at Chemical Banking Corp., said the yen gained at the dollar’s expense after a former U.S. Treasury official, C. Fred Bergsten, said the yen should be strengthened 15% to 20% against the U.S. currency. At the closing in New York, the dollar was quoted at 121.275 yen, down from 123.725 yen on Monday.

There were no significant events to influence the direction of European currencies against the dollar, traders said.

The dollar rose, however, against the British pound. In London, the pound sank to $1.4312 from $1.4397 late Monday. In New York, the pound was quoted at $1.43025, less expensive than Monday’s late quote of $1.4385.

Other dollar rates in New York compared to late rates Monday included: 1.65425 German marks, down from 1.6565; 1.5315 Swiss francs, down from 1.5350; 5.602 French francs, down from 5.606; 1,528 Italian lire, up from 1527.25, and 1.26775 Canadian dollars, up from 1.26275.

Commodities

Lumber futures prices soared the permitted daily limit for the 12th straight day Tuesday and set a new all-time high after the Clinton Administration made clear its resolve to protect wildlife in logging areas.

On other commodity markets, palladium and platinum futures rose sharply; grains and soybeans advanced; oil futures fell, and livestock and meat futures were mixed.

Spruce two-by-fours for March delivery rose to $10 to a record $363.50 per 1,000 board feet on the Chicago Mercantile Exchange, eclipsing the previous record set Monday for the near-month delivery contract.

On New York’s Commodity Exchange, February gold rose 50 cents to $329.40 an ounce. March silver climbed 3.3 cents to $3.70 an ounce.

In energy trading on the New York Mercantile Exchange, light, sweet crude oil for March delivery fell 3 cents to $20.05 a barrel; March heating oil fell 0.36 cent to 56.34 cents a gallon; March unleaded gasoline dropped 0.23 cent to 55.13 cents a gallon, and March natural gas fell 5.5 cents to $1.686 per 1,000 cubic feet.

Market Roundup, D6