Overseas Declines Help Push Dow Down 30.80 : Market Overview

Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:

* The stock market fell sharply again, resuming a slide caused by heavy overseas losses, earnings disappointments and a weak dollar. The Dow Jones industrial average tumbled 30.80 points to 3,277.61.

* Bond yields plummeted after Federal Reserve Chairman Alan Greenspan told a House panel that long-term interest rates had room to fall. The yield on the Treasury’s 30-year bond slumped to 7.61% from 7.66% Tuesday.

Stocks

Gloom settled over the U.S. market as foreign shares fell again. The Tokyo market tumbled overnight to a six-year low, as the Nikkei index plunged 460.46 points to 15,541.95, a 2.9% slide.

At midday today, the Nikkei was off another 54.80 points to 15,487.15.

Takashi Tsuryu, an analyst with Yamaichi Securities, said news that the United States was considering military retaliation against Iraq further aggravated the already bearish Japanese market.

Other key markets followed Tokyo lower. London’s Financial Times 100-share average plunged 27.7 points to 2,387.9. In Frankfurt, the DAX average dropped 31.55 points to 1,628.22, its lowest close since Jan. 16.

With that backdrop, Wall Street never had a chance to mount a rally--even as bond yields dropped on Fed Chairman Greenspan’s comments. Testifying before Congress, Greenspan said that long-term interest rates “have a good way to go down” if in fact the Fed has successfully purged inflation.

Analysts said stock investors in the U.S. and abroad are increasingly becoming convinced that world economic growth will slow dramatically in coming months, hurting corporate profit performance.

With Wednesday’s loss, the Dow now has fallen 84.02 points since last Thursday.

On the New York Stock Exchange on Wednesday, declining issues beat winners 1,056 to 645. Volume was 191.84 million shares versus 173.76 million Tuesday.

Among the market highlights:

* Industrial stocks bore the brunt of Wednesday’s selling. Goodyear lost 1 1/2 to 63 1/2, IBM fell 1 1/4 to 92 1/2, Chrysler sank 5/8 to 18 1/2, GM dropped 1 to 38 7/8, Bethlehem Steel eased 5/8 to 13 1/2 and Kennametal gave up 2 to 29 5/8.

* Health-care stocks, in contrast, were mostly higher. Their quarterly earnings reports have mostly been on target. Amgen, for example, soared 3 to 65 on its strong profit report. Other drug stocks moving up included Immunex, up 2 to 33; Lilly, up 1/2 to 67; and Merck, up 1/4 to 49 3/8.

Also, Upjohn rose 1 1/2 to 33 7/8 in active trading. The company said its researchers have synthesized a compound that is more potent in blocking growth of the HIV virus than currently approved drugs.

* Earnings disappointments continued to take their toll. Computer maker Amdahl, traded on the American Stock Exchange, dropped 1 3/4 to 15 5/8. It posted second-quarter earnings of 15 cents a share, below expectations.

Also among tech issues, Symantec tumbled 7 to 20 3/4. Late Tuesday the company announced quarterly profit that was short of some analysts’ hopes. And Symbol Technologies fell 3 3/8 to 14 5/8 after announcing lower-than-expected results.

* On the plus side, Compaq Computer climbed 3 to 27 5/8. The company posted higher second-quarter earnings and said it reached midyear with a “considerable” backlog of orders for its personal computer products. Elsewhere, software firm Computer Associates rocketed 2 1/8 to 13 3/4 on a healthy profit report.

* Anheuser-Busch slid 3 1/4 to 53. The firm said 1992 beer sales aren’t likely to reach the goal of 2% volume growth over 1991. It blamed the sluggish economy.

Also losing ground among food issues was Hershey, which fell 2 1/8 to 42 1/4. The stock fell even though the firm reported second-quarter earnings up 11%.

Currency

The dollar was mixed in sluggish trading, with money traders apparently worried that central banks might bludgeon them again in supporting the U.S. currency.

Kevin Logan, economist in the New York branch of Swiss Bank Corp., said Greenspan’s comments that the dollar shouldn’t fall much further “just reminded everybody the central bank is out there.”

On Monday, the Fed and several other central banks intervened in currency markets, purchasing dollars and selling German marks. The mark had been rising because of rising German interest rates.

The dollar fell to 1.485 marks in New York from Tuesday’s 1.487. It also closed at 126.63 Japanese yen, up from 125.25.

Credit

Bond traders said investors poured into 30-year Treasury bonds--while selling shorter-term securities--convinced that Fed Chairman Greenspan’s inflation comments herald much lower long-term rates ahead.

While yields fell sharply on the 30-year bond, for example, yields on two- and three-year T-notes were down only slightly.

Greenspan also said Fed officials generally agree that the current monetary supply ranges “were still a fraction high.” Lower money-supply targets would be considered anti-inflationary, a help to long-term bond prices, said Anthony Chan, senior economist at Barclays de Zoete Wedd Securities Inc.

Chan said Greenspan was signaling that he is willing to take a politically unpopular position in favor of tighter money supply.

Bond values overall were also boosted by reports that the Fed was buying bonds for the account of a foreign central bank.

The fed funds rate, the rate on overnight loans between banks, rose to 3.5% from 2.75% Tuesday.

Commodities

Light, sweet crude oil futures settled higher on the New York Mercantile Exchange as traders reacted to bullish inventory reports and increased tension in Iraq.

Heating oil and gasoline futures also were higher.

The September crude oil contract was 29 cents higher at $21.84 a barrel on American Petroleum Institute data showing that stocks for the week ending July 17 declined by 6.14 million barrels.

Crude prices also got a boost from Iraq’s refusal to allow United Nations inspectors to inspect Iraqi records on missiles and nuclear weapons production under terms ending the Persian Gulf War.

Elsewhere, August gold climbed $1.30 to $358.90 an ounce on New York’s Commodity Exchange. July silver was 3.2 cents higher at $3.969 an ounce.