NEW YORK, AUG. 1 -- The Dow Jones industrial average, trading in a narrow range and buffeted by computerized programs on both sides of the market, closed down 5 points today. The index managed to weather a torrent of selling in the shares of many of the nation's premier banks.
Although index-arbitrage programs were often the driving force behind blue-chip movements throughout the session, traders agreed that sharp losses among money-center banks jolted investor psychology. The Dow touched session lows at midday with a 17-point loss near 2888.
Conspicuous losses were posted among banks, particularly Wells Fargo, Security Pacific, First Chicago, Chemical, Continental and Manufacturers Hanover.
Traders said the money-center banks were hit by a combination of factors. Decisions to unload bank stocks were encouraged by a statement Tuesday by the Federal Deposit Insurance Corp. chief, L. William Seidman, that the agency's fund to cover bank failures may post a bigger-than-expected loss this year.
Bank shares had been further undermined by Tuesday's news that the government's S&L cleanup arm, the Resolution Trust Corp., will need $100 billion over the next 12 months.
Another factor serving to undermine bank stocks was increasing evidence of a new collapse in the attempts of United Airlines employees to finance a takeover. UAL Corp. stock fell another 4 points to 136.
At the close, the Dow stood at 2899.26, down 5.94, while declines edged advances on the Big Board on moderately active volume of 176 million shares.
But losses among financial stocks captured most traders' attention.
Among the big banks, Wells Fargo, which traded as low as 63 for a hefty 4 1/2 midday loss, still finished down 2 5/8 at 65 7/8. Continental Bank suffered a big percentage loss, down 1 1/8 to 11 3/4, while Bankers Trust fell 1 to 37, Chemical sank 1 to 22, Manufacturers Hanover lost 1 to 29 1/2, First Chicago gave up 1 to 25 5/8 and Security Pacific surrendered 1 to 30 5/8.
Among the Dow's 30 components, Eastman Kodak provided the only source of solid strength all day on earnings-related gains. Kodak's second-quarter net weighed in at $1.19 per share, compared with 94 cents before extraordinary gains a year ago. The stock closed up 4 1/4 at 42 3/8.
Oil companies generally continued to underpin the broad market during the trading day after word that Iraq and Kuwait had broken off negotiations to defuse a military confrontation. British Petroleum rose 1 1/4 to 75 3/4, and Atlantic Richfield gained 1 1/8 to 130 1/2, for example, as New York September crude oil futures surged 85 cents to $21.54 per barrel.
The Dow transports eased 2.55 to 1090.88, while the utilities surged for the third straight day, vaulting expected technical resistance near 210 to close up 2.89 at 212.90.
Among broad stock indexes, the Standard & Poor's 500 was down 0.63 at 355.52, the NYSE Composite down 0.21 at 194.38, the Value Line down 0.89 at 277.95, and the Nasdaq Composite down 2.33 at 435.91.