Stock and bond prices slumped Tuesday as analysts repeatedly used the word “tired” to describe market conditions.
The Dow Jones industrial average slid 23.50 points to 3443.49 in heavy trading on the New York Stock Exchange. Broader market indexes also dropped as investors cashed in gains in bank, utility, airline and oil stocks. Big Three auto stocks and other multinational cyclical stocks also lost ground.
The Nasdaq composite index of over-the-counter stocks fell 1.06 points to 661.97, despite a modest rebound in Intel, Monday’s big loser.
Gridlock was evident Tuesday on Wall Street as well as Capitol Hill. Institutional investors, seeing no fundamental reason to buy or sell, responded instead to bearish technical market indicators. Volume of Big Board-listed issues was nearly 320 million shares.
The bond market in recent days has been preoccupied with speculation about how the Treasury Department might refigure the mix of maturities as it enters the market to finance the federal debt. Reports are widespread that the Treasury wants to shift from longer-term notes and bonds. This risky bet on the inflation outlook would have the short-term effect of boosting prices for longer-term Treasury debt.
The 30-year Treasury-bond yield, which moves opposite to the bond’s price, rose to 6.75 percent from 6.72 percent, despite a weak report Tuesday on housing starts and building permits. The bond weakness in the face of downbeat economic news, which should favor bonds, helped fuel Tuesday’s slide in stock prices.
Commodity prices, measured by the Commodity Research Bureau index, fell. Rusty Vanneman, analyst at Technical Data in Boston, said the price of copper, a key industrial and construction commodity, is near a 5 1/2-year low. He said that suggests the economic recovery may be worse than many people think.
Wasting away
Several Wall Street analysts turned sour on Chemical Waste Management stock Tuesday after the company reported first-quarter results that were below their estimates. A conference call involving company officials and analysts who follow the stock apparently didn’t improve the mood.
The stock dropped $1.62, to $12.87, a 365-day closing low. Oak Brook-based Chemical Waste, a publicly traded unit of Waste Management, specializes in removal and treatment of hazardous chemicals, as opposed to household garbage and other solid wastes.
The company acknowledged to analysts Tuesday that many industrial customers are attempting to generate lower levels of hazardous wastes. That otherwise desirable trend has the effect of reducing Chemical Waste’s volumes.
In addition, said analyst James MacDonald at Chicago Corp., Clinton administration officials are slow off the mark in putting into effect new environmental regulations that would generate business opportunities for companies such as Chemical Waste.
On the other hand, MacDonald believes the company’s revenues from contaminated-site cleanups will rebound. New cleanup projects depend on a pickup in corporate profits, he said.
Bottoms up
Price competition has been bad news for stocks in companies that make popular-brand cigarettes and diapers, to name a few consumer items.
Now name-brand beer stocks are feeling the heat. Anheuser Busch on Tuesday dropped 37 cents, to $50, not far from its 365-day low of $49. The beverage analyst for Merrill Lynch removed his “buy” recommendation on the stock, citing pricing pressures.
According to Bloomberg Business News, analyst Allan Kaplan sees “particularly fierce” competition in the Chicago area and in California. Also, the lousy weather on the East Coast cut beer sales in the all-important St. Patrick’s Day season. What’s more, brewing costs are down, he said.
