Concern Over Profits Holds Market in Check
Stocks prices were mixed Tuesday as disappointing corporate earnings, takeover speculation and the federal spending battle kept investors on edge.
Defense, computer and airline issues were notable casualties, but auto stocks advanced.
The Dow Jones average of 30 industrials edged up 1.12 to 1,325.49 after hovering near Monday’s close for most of the session.
But losers overall outpaced gainers by four to three on the New York Stock Exchange, whose composite index slipped 0.06 to 105.19.
Big Board volume totaled 97.17 million shares, against 95.55 million Monday.
Prices remain under pressure from investors’ concern that third-quarter corporate earnings will be weak relative to a year ago, particularly since Wall Street has shown little patience for companies that already have reported or forecast disappointing results, brokers said.
Time Inc., for example, dropped 1 3/8 to 54 3/4 after saying that its third-quarter profit would be “somewhat lower” than a year ago.
May Hamper Rally
The fear that more companies will report poor earnings “is still quite prevalent in the market,” said Eugene Peroni, technical analyst at Bateman Eichler, Hill Richards in Los Angeles. “I think any rally from these levels will be hampered by that feeling.”
Viacom jumped 5 3/4 to 52 after a rumor surfaced that the company might be acquired by Gannett, which fell 3/4 to 53. Viacom declined comment, but Gannett spokesman Michael Volpe said that “there is no truth to the rumor” and that Gannett “is not involved in any negotiations to buy Viacom.”
SCM climbed to 72 3/4 in active trading after Hanson Trust of Britain offered $75 a share for the two-thirds of SCM stock that it does not already own. SCM has agreed to be acquired for $74 a share by an investment group led by Merrill Lynch, which was unchanged at 27 3/4.
Beatrice rose 2 3/4 to 42 and topped the NYSE’s active list amid rumors it is mulling a leveraged buy-out.
In the computer sector, Digital Equipment tumbled 3 1/8 to 103 7/8, Data General fell 1 to 34 and Hewlett-Packard lost 1 to 29 3/4. But International Business Machines edged up 1/8 to 124 3/8.
More Block Trades
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,868, compared to 1,709 on Monday.
In the bond market, prices drifted higher as traders waited for action to be taken on raising the debt ceiling.
In the secondary market for Treasury bonds, prices of short-term issues rose 1/32 point, intermediate maturities were up by between 1/32 point and 11/32 point and long-term issues were up as much as 13/32 point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
Among corporate bonds, industrials and utilities were up point in moderate trading. In the municipal market, general obligations and revenue bonds also rose point.
