NEW YORK, OCT. 26 -- The Dow Jones industrial average fell 48 points today as the stock market was swept up by fears of a Mideast war and possible collapse of the nation's big banks. Selling by program traders dominated the afternoon market.
At the opening, the Dow quickly tumbled 20 points in a trading environment dampened by overnight losses in foreign stock markets and news that U.S. forces in Saudi Arabia could swell by another 100,000.
Heavy selling of bank shares added to the downward momentum, prompted by Thursday's announcement by New York's Manufacturers Hanover that its dividend isn't ironclad in the face of current pressure on earnings. The comment followed earlier announcements by Chemical Bank and Chase Manhattan that dividends would be cut, and analysts warnings that others were likely. Manufacturers Hanover plunged 3 points to 17 to post a nearly 14 percent loss on the day. Its two-day loss amounted to nearly 21 percent.
Among other money centers, Wells Fargo skidded 3 5/8 to 47 7/8, effectively wiping out gains enjoyed on Wednesday and Thursday after news that investor Warren Buffett had acquired a nearly 10 percent stake. Citicorp fell 1/2 to 11 1/8 as an auction of remarketed preferred stock moved at 12 percent.
Bankers Trust ended the session down 1 7/8 at 31 1/8, BankAmerica down 1 1/8 at 18 3/4, Bank of New York down 1 1/8 at 16 1/8, Chemical down 1 at 11 1/4, Security Pacific down 1 5/8 at 18 5/8 and First Interstate down 1 3/8 at 18 1/8.
Even J.P. Morgan lost 1 to 35 5/8, and Republic New York gave up 3/4 to 38 1/4. Battered Chase Manhattan, edging ever closer to single-digit numbers, dropped 1/4 to 11.
"Any way you look at it, with the big banks acting this poorly -- after a lot of people thought they had finally seen the worst -- the financial system and the economy have got to be hurting," said chief trader Jeffrey Kaminsky at Mabon, Nugent. "And people are beginning to believe there's not a whole lot the Fed can do about it."
At the close, the Dow stood at 2436.14, down 48.02, while declines swamped advances on the New York Stock Exchange by 1,152 to 369 on light volume of 130 million shares. On the week, the Dow lost over 84 points.
Apart from the money-center banks, other price disasters included Unisys Corp., which plummeted 1 1/8 to 2 1/4 in most-active trading of over 11 million composite shares for a 33 percent loss of its much-diminished value. The slide in Unisys came amid heightened long-term perceptions that the company may go bankrupt or be liquidated. Prudential-Bache helped things along by reiterating its month-old "sell" recommendation.
Elsewhere in the banking industry, First City Bancorp of Texas plunged 1 1/8 to 3, a 27 percent loss, amid worries that Texas real estate markets will deteriorate further.
But news from the financial sector was not all disastrous. Aetna Life and Casualty, for example, was up a point most of the day, and managed to close up 1/4 at 31, after dismal third-quarter earnings and layoff of 2,600 employees.
Among other companies reporting earnings, diesel-engine producer Cummins eased 1 1/8 to 37 1/8 after announcing a quarterly loss.
Sears shed 2 to close at 23 7/8, ending a bad week following a disappointing quarterly report. Boeing dived 2 1/8, closing at 45 3/4.
The Dow transports lost 12.23 to 839.10, while the utilities eased 1.13 to 208.69.
Among broad stock indexes, the Standard & Poor's 500 was down 5.46 at 304.71, the NYSE Composite down 2.80 at 166.71, the Value Line down 3.43 at 219.67, the Amex Market Value down 1.39 at 291.39 and the Nasdaq Composite down 5.38 at 334.36.