Stocks Drift as Trading Slows; Dow Slips 0.11
The stock market showed no consistent trend Wednesday as investors awaited developments on oil prices and the federal budget.
The Dow Jones average of 30 industrials closed at 1,593.12, down 0.11 from Tuesday.
Volume on the New York Stock Exchange slowed to 134.31 million shares from 175.73 million on Tuesday.
The Dow Jones industrials set a record closing high of 1,594.27 on Monday and crossed 1,600 briefly in Tuesday’s trading before settling back.
Oil Prices Watched
Analysts said investors found no great surprises in President Reagan’s State of the Union message Tuesday night or in the budget proposal that he sent to Congress.
Traders were also watching to see if oil prices might stabilize. After taking a sharp drop Monday and Tuesday, the oil markets steadied Wednesday.
Energy issues, which sold off in Tuesday’s trading, turned mixed. Chevron rose to 34 and Texaco gained to 26 3/4, but Exxon lost 3/8 to 48 3/4, Occidental Petroleum dropped 1/2 to 26 1/2 and Amoco was down 3/8 at 53 1/2.
Leading bank stocks remained weak as investors assessed the prospective impact of energy loans on the banking system. Citicorp fell 1 to 47 3/8, Chase Manhattan 1 3/4 to 70 1/2, J. P. Morgan 1 1/8 to 61 and Texas American Bancshares 1 to 22.
Sears, Roebuck, which reported that its fourth-quarter earnings slipped to $1.50 a share from $1.54 in the comparable period a year earlier, dropped 5/8 to 39.
General Motors led the active list, down 3/4 at 75 1/2 in trading that included two blocks of 1 million shares apiece.
Securities industry stocks were broadly higher, reflecting the recent strength in the bond and stock markets. Phibro-Salomon climbed 1 3/8 to 49, Bear, Stearns 1 3/4 to 28 3/8, Merrill Lynch 1 3/8 to 39, E. F. Hutton 7/8 to 39 1/2 and Quick & Reilly Group 1 to 38.
Champion Spark Plug tumbled 1 5/8 to 9 7/8. The company denied takeover rumors, and directors postponed action on a dividend.
In the overall tally on the Big Board, advancing issues slightly outnumbered declines.
Bond prices declined and interest rates bounced up a bit amid disappointment over the demand for new Treasury securities.
A pause in the recent plunge in oil prices and a move by the Federal Reserve that was seen as a sign that the central bank is not inclined to loosen its grip on credit also hurt bond prices, analysts said.
Dealers were disappointed with the Treasury’s auction of $7 billion in 10-year notes, which was the second sale in a three-part financing operation.
The average return on the 10-year notes fell to 8.97%, the lowest level in more than seven years. The average yield was down from 9.54% at the last auction in November and the lowest since 8.85% for 10-year notes on Nov. 15, 1978.
But dealers said the amount of bids submitted, $15.8 billion, implied only tepid interest in buying government securities.
In addition to the $7 billion in 10-year notes sold to domestic bidders, the government auctioned $1 billion in 10-year notes designed for foreign investors. The average yield in this auction was 9.12%.
In the secondary market for Treasury securities, prices of short-term governments were off 1/32 point to 1/8 point, intermediate maturities fell 3/32 point to 27/32 point and long-term issues dropped 3/8 point to 7/16 point.
Treasury Indexes Drop
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, moved down 0.24 from late Tuesday to 111.14. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, fell 2.45 to 1,164.60.
In corporate trading, industrials and utilities slid 1/8 point in quiet activity.
Among tax-exempt municipal bonds, revenue bonds and general obligations slipped point in moderate trading.
Yields on three-month Treasury bills rose four basis points to 7.02%. Six-month bills increased three basis points to 7.08%, while one-year bills gained two basis points to 7.08%.
Yields on 30-year Treasury bonds edged up to 9.28% from 9.25% late in the previous session.
The federal funds rate--the interest on overnight loans between banks--traded at 7.5%, compared to 7.5625% late Tuesday.
