Dow Falls 34.21 as Interest in Buying Falters : Market Overview

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

* The stock market posted a broad decline as many worried investors stayed on the sidelines waiting for key government economic reports due later this week. The Dow Jones industrial average sank 34.21 points to 3,369.92.

* Bond yields rose slightly, while grain prices continued to race ahead on weather-related worries.

Stocks

Declining issues outnumbered advances by more than 2 to 1 on the New York Stock Exchange, a lopsided ratio that worried many traders.

Volume on the floor of the Big Board came to 191.17 million shares, not heavy, but well above Monday’s 161.24 million.

Still, analysts attributed Tuesday’s losses more to a lack of buying interest than to heavy selling pressure. There was little news to move the market, they said.

“There has not been really strong buying interest for the last week or so,” said Michael Metz, analyst at Oppenheimer & Co.

Investors remain cautious ahead of Thursday’s expected reports on May retail sales and producer prices, as well as the May report on consumer prices due Friday.

After last Friday’s surprising report that unemployment shot up in May, some investors are losing faith in the economic recovery. If this week’s reports are less than robust, pressure will grow on Wall Street for another cut in interest rates by the Federal Reserve.

With investors unsure of the Fed’s intentions, profit taking in a wide array of stocks seemed inevitable this week, some traders said.

Smaller stocks suffered worse than the Dow. The NASDAQ composite index fell 8.21 points to 573.80, a 1.4% loss versus the Dow’s 1% drop.

Among the day’s highlights:

* Industrial issues that were hard-hit Tuesday included Alcoa, off 1 1/4 to 77 3/4; Goodyear, down 1 3/4 to 68 1/2; 3M Co., off 1 1/4 to 94 1/4, and Deere, down 3/4 to 43 3/4.

* Paper and lumber stocks were down sharply after brokerage Salomon Bros. cut earnings estimates on economic worries. International Paper fell 2 3/8 to 64 7/8, Weyerhaeuser slid 7/8 to 32, Georgia-Pacific lost 3/4 to 60 7/8 and Stone Container gave up 7/8 to 22 3/4.

* Newspaper stocks lost ground on new worries about ad spending in a weak economy. A Salomon analyst downgraded many of the stocks. Gannett tumbled 2 3/8 to 44 5/8, Knight-Ridder lost 2 to 56 1/2 and Washington Post fell 3 to 235 1/2.

* Airlines also dived again after Delta on Monday led a new round of price cuts. Delta fell 1 5/8 to 58 5/8; American Airlines’ parent AMR tumbled 1 1/4 to 64 5/8, and Alaska Air dropped 7/8 to 20 3/4.

* The market’s decline hit brokerage stocks. Merrill Lynch dropped 2 1/4 to 45 3/8; Schwab plummeted 1 7/8 to 25 3/4, and Morgan Stanley lost 1 to 50 3/4.

* Smaller stocks dragged lower by profit taking included auto parts store chain Autozone, down 2 to 28 7/8; medical instrument firm Tokos Medical, down 2 7/8 to 29 1/4, and System Software, down 2 3/4 to 31 1/4.

* Electronic parts distributor Anthem Electronics crashed 5 3/8 to 38 1/2. A Smith Barney analyst cut 1992 earnings estimates although it appeared that some investors were also put off by a planned corporate reorganization at Anthem.

* Abbott Laboratories was unchanged at 27 3/4. The company said Monday that it will take a charge against second-quarter earnings to cover costs associated with taking a new antibiotic off the market.

* On the plus side, Wetterau Inc. rocketed 6 3/8 to 30 3/8 after Super Valu Stores said it will buy the supermarket chain.

In overseas trading, London stocks declined, with the Financial Times-Stock Exchange list of 100 issues down 10.4 points at 2,635.4. In Frankfurt, the DAX index declined 2.81 points to 1,786.26.

In Tokyo, the 225-share Nikkei average was up 189.98 points, or 1.1%, to 17,845.04.

Credit

The price of the Treasury’s main 30-year bond dropped 13/32 point, or $4.06 per $1,000 in face amount Its yield rose to 7.88% from 7.84% late Monday.

Analysts said the market was fairly quiet in the absence of economic news, and there was little movement in morning dealings.

But bonds fell in the afternoon on technical factors related to trading of two-year notes and selling in the bond futures market, said William V. Sullivan, director of money market research at Dean Witter Reynolds Inc.

Also, he said a weekly survey by Johnson Redbook indicated that department store sales rose in the week ended Saturday.

That would show an improving economy, which would lessen the chance that the Federal Reserve will lower interest rates.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3.00%, down from 3.625% late Monday.

Currency

The dollar settled mostly higher, with most traders focused on the German mark.

The dollar edged up to 1.592 German marks in New York, from 1.588 Monday; and to 127.50 yen, up from 127.15.

Analysts said the dollar came under pressure early in the session as the German mark firmed. But as the day wore on, the mark weakened, and the dollar benefited.

The mark has drawn continual strength from Denmark’s rejection last week of the Maastricht treaty for European political and economic union. Germany is perceived to have the best chance for independent economic survival if attempts to unify Europe fail.

But the mark fell Tuesday on profit taking and amid confusion about what will happen following Denmark’s action.

Commodities

Rain in the nation’s wheat fields continued to delay harvesting and sent futures prices surging higher on the Chicago Board of Trade.

A two-week rally has added more than 10%, or 35 cents a bushel, to the July wheat contract.

“Every day wheat stays in the field past ripening, even if it’s dry, is bad,” said O. H. Williams, an agronomist in Cordell, Okla.

And it’s been anything but dry.

Tuesday was the 26th consecutive day of rain in the wheat fields of Oklahoma, where the crop is beginning to mold or sprout in the head because it’s too muddy to get equipment into the fields.

Wheat for delivery in July settled 7 cents higher at $3.76 1/2 a bushel; July corn was 1/2 cent higher at $2.64 a bushel; July soybeans were 8 1/2 cents higher at $6.30 a bushel.

Energy futures were mostly lower on the New York Mercantile Exchange. Light, sweet crude oil for July delivery was 12 cents lower at $22.32 a barrel.

Precious metals were unchanged to a little higher at New York’s Commodity Exchange. Gold for delivery in June was 10 cents higher at $338.30 an ounce; July silver was unchanged at $4.048 an ounce.

Market Roundup, D6