NEW YORK, JUNE 13 -- The Dow Jones industrial average eased 3 points today after a session of choppy, occasionally volatile trading in which stocks lagged appreciably behind the solid advance of bonds.
The bond market surged to over half-point gains immediately after the Commerce Department released data showing that retail sales continued to be sluggish in April. Bond traders took that as a signal that interest rates could ease further in coming weeks.
But while bonds forged higher on the news, the stock market essentially stopped in its tracks at the opening, showing little follow-through buying or even short-covering despite the cumulative 71-point Dow gain on Monday and Tuesday. Traders said perceptions of possibly lower interest rates, usually a boon to the stock market, were initially outweighed by resurgent concerns over the underlying health of the economy.
Those concerns were crystalized in the shellacking taken by the stock of HomeFed Corp., the holding company for one of the nation's best capitalized thrifts. After failing to trade for fully 4 1/4 hours -- first for order imbalance, then for extended news dissemination -- HomeFed finally opened on the NYSE down 7 3/4 at 25 1/2. The plunge was attributed to an announcement late Tuesday that subsidiary HomeFed Bank had increased by $81 million its estimate of gross nonperforming assets -- those not earning interest -- during May.
But traders said selling from the HomeFed debacle did not spill over much beyond the financial sector. West Coast banks, such as Wells Fargo, appeared to bear the brunt of selling. Wells skidded more than 2 points, and HomeFed itself finished down more than 8 points for a stunning 25 percent loss on the day.
At the close, the Dow stood at 2929.95, down 3.47, while declining issues slightly edged advancing ones on the Big Board on moderate volume of 160 million shares.
The Dow transports slipped 4.19 to 1204.57, while the recently volatile utilities dropped 1.07 to 213.97.
Among broad stock indexes, secondary measures outperformed blue-chip measures handily. The Standard & Poor's 500 was down 1.35 at 364.90, the NYSE Composite down 0.66 at 199.00, the Value Line down 0.14 at 290.66, the Amex Market Value up 0.73 at 365.04 and the Nasdaq Composite up 2.30 at 468.86.