urbulence in the Middle East as well as the South Atlantic helped jolt the stock market today to its lowest point since early March.
The Dow Jones Industrial Average closed down more than 6 1/2 points at 795.57, after being off as much as 10 points during the day. The average has fallen more than 73 points in the last five weeks, to its lowest level since March 8, when it stood at 795.47.
Declining stocks on the New York Stock Exchange outnumbered advancing issues by more than two-to-one as volume rose to 56.2 million shares from 46.8 million traded yesterday. Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 65.46 million shares.
"I think the market is overdue for a rally, but the news has bad news in it everyday," said Robert Stovall, senior vice president of Dean Witter Reynolds Inc.
"The fear is that the recession will go on longer, that the Falklands Islands situation will cost us and NATO a lot of money for a long time, and that the Middle East conflagration could last a lot longer, involve a lot more countries and disrupt the oil flow," Stovall said.
Many analysts echoed Stovall's fears about the escalating conflict in the Middle East. "This is not the Falklands Islands. This is the big leagues," warned Larry Wachtel, first vice president for research at Bache Halsey Stuart Shields. "It represents a good excuse not to do anything in a period when you wouldn't do anything anyway."
But analysts said the conflict in the Mideast was responsible for a strong showing by the dollar, which rose in Europe to 6.2825 French francs from 6.2325, to 2.407 marks from 2.3955, and to 2.0491 Swiss francs from 2.0405. In Tokyo the dollar jumped to 248.45 yen from 245.65 despite intervention of the central bank.
"When trouble is brewing, wealthy foreigners want their money in the U.S. dollar," one dealer said.
The political conflicts added to the reluctance of investors, both large and small, to move toward the stock market, analysts said. "I find an awful lot of complacency out there," said Stewart Pillette, first vice president and associate research director of Drexel Burnham Lambert Inc. "It would appear that the buyers have gone on strike."
Only five stocks reached new highs on both the New York and American exchanges; 167 stocks reached new lows on the NYSE and 45 hit new lows on the Amex.
The Standard & Poor's index of 400 industrials fell 0.69 point to 121.76, and S&P's 500-stock composite index was down 0.64 point at 108.99.
The American Stock Exchange index closed at 254.62, down 2.25 a share as volume fell slightly to 3.5 million shares. In over-the-counter trading, the NASDAQ composite index fell 2.34 points to 170.94.
In gold trading, prices in Zurich fell $1 to $327.50 an ounce; in London they dropped to $328.375 from $330.125 Tuesday. In New York gold finished at $327.20, down from $331. The New York Commodity Exchange settled at $327.20, down from $331.30.
Silver dropped to $5.89 an ounce from $6.04 and settled on the Comex at $5.881, down from $6.05.