NEW YORK, NOV. 20 -- The Dow Jones industrial average fell 35 points today amid new indications of recession and disturbingly sharp losses in a handful of widely held issues.
This morning the Commerce Department announced that October U.S. housing starts tumbled 6 percent and that housing permits -- a leading indicator of starts -- fell an even greater 6.8 percent. The severe drops occurred after nine months of declining numbers, suggesting no end in sight to recessionary pressures in housing construction, economists said.
Serious losses in certain prominent issues also vexed the market and undermined bullish psychology, traders said.
Dow stalwart Boeing Co. created new worries about market leadership and psychology by tumbling 4 3/4 points to 42 1/2, a 10 percent loss, after Goldman Sachs aerospace analyst Judy Comeau downgraded the stock to "hold" from "buy." Boeing traded as low as 42 during the day.
Another prominent loser was MCI, which closed at 19, down 2 7/8 on heavy trading of more than 10 million shares. The proximate cause appeared to be MCI's announcement that a joint marketing deal with Hotelcopy, a firm that operates a commercial facsimile copy network, had been suspended. But the company's stock has now fallen almost 50 percent from its all-time highs as a slowing economy and increased competition in the long-distance market have cut into MCI's growth and profits.
Stocks' fall came despite support from the bond market, which continues to advance as interest rates fall. The Treasury's bellwether 30-year bond rose 9-16 point, or $5.63 per $1,000 in face amount, as yields eased to 8.46 percent.
Institutional trader Brad Weekes at Donaldson Lufkin and Jenrette said, "Yesterday, stocks were up and bonds down, while today bonds are up but stocks are down. Things are getting pretty confusing, but I still think the market's going higher near term."
At the close, the Dow stood at 2530.20, down 35.15, while declines outpaced advances on the Big Board by a ratio of about 2 to 1 on volume of 162 million shares, up from Monday's 140 million.
Among Dow components, General Electric fell 2 1/8 to 53 1/4 in heavy trading, IBM slumped 1 3/8 to 113 3/8, also on high volume, American Express gave up 1 1/8 to 20 1/2 and United Technologies finished off 1 at 44 5/8.
Among industry groups, aerospace-defense issues appeared to suffer from spillover selling tied to the Boeing loss. Lockheed lost 1 1/8 to 29 3/4, McDonnell Douglas fell 1 5/8 to 49 7/8 and Raytheon dropped 2 1/2 to 67.
HomeFed Corp., a San Diego savings and loan firm, plunged 1 7/8 to 5 1/2, a 25 percent drop. Merrill Lynch analyst Jerome Gitt issued a report suggesting that, based on HomeFed's 10-Q filing on Nov. 14, nonperforming loans in the fourth quarter could exceed $1 billion compared with $749 million in the third quarter.
The Dow transports fell 14.80 to 853.00, as UAL lost 3 3/4 before closing at 96 3/8. The Dow utilities tumbled 1.63 to 207.06.
Among broad stock indexes, the Standard and Poor's 500 was down 4.03 at 315.31, the NYSE Composite down 1.86 at 172.48, the Value Line down 2.10 at 228.22, the Amex Market Value down 0.46 at 296.01 and the Nasdaq Composite down 4.44 at 348.29.