Industrials Sink 139.67, Erasing Week's Rise ---- Gains-Tax News Could Be a Jolt
Easy come, easy go.</br></br>Stocks surrendered almost all of the gains that carried them to records Monday and Tuesday, buckling under the pressure of sinking bond prices and program-driven stock sales. The dollar fell.</br></br>The Dow Jones Industrial Average tumbled 139.67 points, or 1.93%, to 7085.65. That puts the average almost exactly at its previous record of 7085.16 on March 11, before a Federal Reserve interest-rate increase touched off a nearly 700-point, 9.8% pullback. The Dow industrials subsequently rallied more than 800 points, capped with a 143.29-point jump Monday to a record, driven by euphoria over a budget deal, tumbling bond yields and an expected capital-gains-tax cut.</br></br>Yesterday, the market was threatened with having both props kicked out from under it. Poor bidding at a 10-year Treasury-note auction and troubling labor-cost data sent the 30-year bond price down 29/32, or $9.06 per $1,000 bond, driving its yield up to 6.96% from 6.89%.</br></br>Then after the stock market closed yesterday, the heads of Congress's taxwriting committees set yesterday as the effective date of any capital-gains-tax cut enacted as part of the budget plan agreed to with President Clinton. That means the cut would apply to sales and exchanges occurring on or after May 7, 1997.