Stocks on Wall Street fell Thursday, tracking a general slide in equity prices around the world.
But bonds rallied after the government posted its first revision of second-quarter economic growth statistics.
The dollar, meanwhile, gained against the Japanese yen but fell against the German mark.
The Dow Jones industrial average, which see-sawed all day, ended off 92.90 points, at 7694.43, on moderate New York Stock Exchange volume of 487 million shares.
The Dow industrials gyrated between a 129-point drop and a 25-point gain, prompting the NYSE to impose its curbs on index-arbitrage trading four times in a single day–the first time that has happened since the curbs were implemented in 1990.
The NYSE imposes the so-called collar when the Dow gains or loses 50 points. The collar is removed when the Dow retraces 25 points of the move. The curbs were triggered three times in the final hour of trading.
Broader market indexes also fell, but losing stocks outnumbered winners by only about 14-to-13 among NYSE-listed stocks. International Business Machines, losing $2.75, to $101.12, led the Dow industrials lower.
Erosion in computer-technology stocks pushed the Nasdaq composite index down 14.22, to 1581.32. Once again, the best performer among popular stock indexes was the Russell 2000 index of small-company stocks, which gained 0.76, to 421.60.
Stocks had a rough day from Asia to Europe to America. The Hang Seng blue-chip index at the Hong Kong Stock Exchange sank 4.2 percent; the CAC 40 index on the Paris Stock Exchange fell 1.5 percent; the IPC Bolsa index on the Mexico Stock Market dropped 2.5 percent.
Analysts noted a general flight to safety in bonds after a retreat by many of the world’s equity markets that had marched steadily higher for most of the year.
U.S. technology stocks hit the skids after California-based Altera, a maker of computer chips, warned of disappointing third-quarter sales. Altera lost $9, to $52.37. Schaumburg-based Motorola, another chipmaker, dropped $1.37, to $74.62.
The yield on the benchmark 30-year Treasury bond fell to 6.58 percent from 6.65 percent late Wednesday. Analysts attributed the rally to technical factors, such as month-end buying.
But bond investors were heartened by news that the upwardly revised second-quarter gross domestic product growth reflected, in part, a buildup of inventories, said Marshall Front of Chicago-based investment firm Trees Front Associates.
Swelling inventories in the second quarter imply slower economic growth in the current quarter, he said. The second-quarter inventory gain was the largest since 1984.
The dollar again slumped against the German mark after Hans Tietmeyer, president of Germany’s central bank, said he was on guard against the inflationary implications of higher import prices being paid by Germans this summer.
The yen lost value after a Japanese finance official said the nation’s new consumption tax, imposed this summer, was hurting economic growth more than the government anticipated.
All of the expert comments about Thursday’s financial-market action were tempered by the thin, pre-holiday trading. The Treasury bond market conducts an abbreviated session Friday ahead of the Labor Day weekend.
Fund flows: Mutual fund investors pumped $26.6 billion of net new cash into equity mutual funds in July, up from $23 billion in August, the Investment Company Institute reported. But fund companies indicated that pace slowed in August, reflecting seasonal summer slowdown and the recently volatile stock market.
Mutual Fund Trim Tabs, a California firm that tracks cash flow into and out of mutual funds, estimates equity funds will net $9 billion in new cash in August.
No. 1 in net new inflows among equity mutual funds was the $45.9 billion Vanguard Index Trust 500, a fund that replicates the Standard & Poor’s 500-stock index.
Cash flow into equity funds for 1997 totaled $136.7 billion through July, down from $143.9 million in the year-earlier period.
Bond funds attracted $4.2 billion in July, double the $2.1 billion in June, with most of it going into high-yield corporate bond funds. Money market funds took in a net $15.2 billion, many times higher than $989 million in June.
Through July, bond fund net cash flow totaled $13.6 billion, nearly double the $7.5 billion in the year-earlier period, indicating some investors are rebalancing their investment portfolios after strong gains in stock prices.
Local news: Chicago-based chemicals and machinery manufacturer FMC gained 69 cents, to $84.25, after the company announced plans to repurchase $500 million of its stock through the end of 1999. FMC stock has a market value of $3.1 billion.
– Trans Leasing International, Northbrook, which leases medical and scientific equipment to health-care providers, gained $2, to $9.25. The company plans to sell nearly all its assets to General Electric capital, a unit of General Electric, and pay shareholders a liquidating dividend of about $10 a share–about three times what the stock traded for a year ago.
– Wisconsin Central Transportation, a Rosemont-based railroad operator, slipped 81 cents, to $32.62, after the company said it was part of a consortium that bid successfully for the rail system on the Australian island of Tasmania. Wisconsin Central plans to invest $5 million in the railroad.
