Economy Fears Pressure Stocks; Dow Dips 0.67

Market Overview

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

* Stocks edged lower as worries about the weak economy continued to weigh on investors. The Dow Jones industrial average slipped 0.67 points to 2,902.06, but the broad market was much weaker.

* Treasury bond yields inched up amid market anxiety that any federal plan to stimulate the economy may be poorly devised.

Stocks

As Wall Street began Thanksgiving week, analysts said little had occurred to dispel the bearish mood over the faltering economy.

That left sellers clearly in control of the stock market, as they have been since Nov. 15: On the New York Stock Exchange, losing stocks outnumbered winners 1,032 to 616 Monday. On the NASDAQ market, the split was 981 to 696 in favor of the losers.

Big Board volume came to 175.87 million shares, down from Friday’s 188.26 million. Volume is expected to be moderate all week, with many traders away for the holiday.

Among the market highlights:

* Financial stocks were among the hardest hit, as some investors took profits on brokerage and insurance stocks and others continued to bail out of banking issues.

Among brokerages and insurers, Morgan Stanley lost 2 to 53, A. G. Edwards fell 2 3/8 to 27 3/4, Merrill Lynch dropped 2 3/8 to 48 3/4, and Broad eased 1 1/8 to 14 1/8.

Among banks and S&Ls;, Wells Fargo fell 1 3/8 to 57 1/2, Downey Savings lost 3/4 to 11, and Citadel Holding gave up 7/8 to 13 1/2.

* Oil stocks were weak. Arco tumbled 4 3/4 to 101 7/8, a 1991 low. Some analysts have been trimming earnings estimates, and rumors were rife that the company will soon cut its dividend. Arco “categorically” denied that a cut was in the works.

Meanwhile, ailing Tenneco rose 1 7/8 to 34 3/4 after agreeing to sell its natural gas liquids business to Enron for $632 million.

* Aerospace issues were a bright spot. Litton rose 7/8 to 87 after reporting better-than-expected first-quarter earnings. Other gainers included Lockheed, up 1 to 43 1/2; Boeing, up 7/8 to 44 1/2, and Rohr Industries, up 3/4 to 20 3/4.

* Bristol-Myers Squibb tumbled 2 3/8 to 77 7/8. Paine Webber lowered its 1992 earnings estimates on the drug company, citing lower-than-expected drug price increases. On Friday, Smith Barney also cut its 1992 outlook.

* Torrance-based Standard Brands Paint fell 1/2 to 3 3/8. The financially troubled retailer hinted last week that bankruptcy is a possibility if it can’t agree to terms with an investor group that has proposed a capital infusion.

* Live Entertainment plunged 1 5/8 to 6 3/4, and Carolco lost 3/8 to 3 1/8 in trading apparently related to their impending merger.

* Discount toy retailer Value Merchants slumped 2 5/8 to 35 3/4 despite reporting a 28% rise in quarterly earnings. Pasadena-based mortgage banker Countrywide Credit fell 2 3/4 to 31 7/8 after a Barron’s story questioned its growth prospects.

Overseas, Tokyo stocks fell for a ninth straight day, breaking a 23-year-old record and heightening concerns about the market’s health. The Nikkei average slid 248.70 points, or 1.1%, to 22,868.69.

Stocks slipped in Frankfurt, with the DAX average falling 11.10 points to 1,589.16. But in London, the Financial Times 100-share average gained 9.9 points to 2,456.2.

Credit

The yield on the Treasury’s bellwether 30-year bond was flat at 7.98%, but yields on shorter-term T-bonds inched up slightly in continued nervous trading.

The rise in yields came despite a report of another drop in car sales--a weak economic report that would normally buoy bonds. The bond market seems suspicious that Congress will eventually enact some kind of economic rescue plan that could fuel inflation.

In an auction Monday, the Treasury sold $13.53 billion in two-year notes at an average yield of 5.51%.

The fed funds rate, the rate on overnight loans between banks, rose to 4.94% from 4.75% Friday.

Currency

The dollar settled lower in foreign markets but turned mixed in domestic trading.

Most of the day’s activity centered on other currencies. The yen spiked higher after comments overnight by Bank of Japan Gov. Yasushi Mieno, who said he preferred a stronger yen.

In New York, the dollar plunged to 127.90 yen from 129.40 Friday. But it rose to 1.589 German marks from 1.584.

Commodities

Precious metals prices fell as news of weak auto sales prompted traders to take profits from last week’s strong gains.

On New York’s Comex, gold for December fell $1.20 to $368.10 an ounce, and December silver fell 6 cents to $4.07 an ounce. Platinum for January dropped $2.30 to $371.50 on the New York Merc.

Meanwhile, oil prices rose on the Merc, but refined petroleum product futures were mixed as traders awaited news from an OPEC meeting that begins today.

Light, sweet crude oil for delivery in January rose 21 cents to $21.42 per barrel. December home heating oil rose 0.41 cent to 62.47 cents a gallon.

Market Roundup, D12