Stocks Drift in Erratic Trading; Dow Up 2.53
The stock market showed no clear-cut trend Wednesday as traders continued to reassess the outlook for oil prices and interest rates.
The Dow Jones average of 30 industrials, down about 10 points briefly in early trading, closed with a 2.53 gain at 1,779.53. Most other indicators posted modest losses.
Volume on the New York Stock Exchange slowed to 127.51 million shares from 153.09 million on Tuesday.
The markets have reacted with some confusion and uncertainty to word of an agreement by the Organization of Petroleum Exporting Countries to cut production for two months in an effort to bolster prices.
At first, the news was taken as a distinct plus for the energy and banking industries and a possible portent of a new stability in oil prices.
However, many analysts questioned whether and for how long the various OPEC members will stick with commitments to hold back on their oil output.
Another unsettling question for stock traders was the reception that investors would give to the Treasury’s sale of 10-year notes Wednesday and 30-year bonds today.
There has been concern on Wall Street that interest rates might have to rise to spark enough demand to absorb the auctions.
Oil Issues Slip
Oil stocks pulled back a bit after posting strong gains in the week’s first two sessions. Exxon dropped to 64 1/8, Chevron to 39 3/4, Occidental Petroleum to 26 and Amoco 1/8 to 62 3/8.
Textile stocks came under pressure as the House upheld President Reagan’s veto of a bill that would have significantly rolled back textile and apparel imports. Pannill Knitting fell 1 3/8 to 20 and Tultex 1 1/8 to 18.
Owens-Corning Fiberglas led the NYSE active list and rose 1/2 to 74 1/2. The company said it had received a request for a meeting with Santa Monica-based Wickes Cos. to discuss a $70-a-share acquisition of Owens-Corning by Wickes.
Wickes shares dropped 1/8 to 5 3/4 as the volume leader among American Stock Exchange issues.
Jostens jumped 3 1/8 to 35 5/8. The company reported higher quarterly earnings and said it planned to make a tender offer for as many as 3.5 million of its common shares.
Briggs & Stratton fell 2 to 32 1/2. Earnings for the quarter came in at 35 cents a share, down from 59 cents a year earlier.
Losers Edge Gainers
In the overall tally on the Big Board, about nine issues declined in price for every seven that gained ground.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,586, compared to 2,981 on Tuesday.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 151.58 million shares.
Standard & Poor’s index of 400 industrials lost 0.42 to 261.79, and S&P;’s 500-stock composite index was down 0.19 at 236.84.
In the credit markets, government bond prices lost more ground as the Treasury continued its $28-billion auction with the sale of 10-year notes.
Long-term maturities, including the bellwether 30-year Treasury bond, posted the sharpest declines.
Long Bonds Drop
Prices for 20-year bonds dropped nearly a point, while 30-year bonds slipped 21/32 point to yield 7.57%, up from 7.52% late Tuesday.
Bond prices began dropping in early trading due to worries about the sale of $9.5 billion in 10-year notes and today’s $9-billion auction of 30-year notes, credit market analysts said. But the market showed signs of steadying once the quarterly auction was well under way, they said.
“The market was essentially unchanged from the auction time to the closing,” said Maria F. Ramirez of Drexel Burnham Lambert. “The auction was not a bad auction. The interest was not as strong as it usually is with the 10-year note.”
In the auction, yields on 10-year Treasury notes fell to 7.47%, the lowest level ever for this type of security. The sale attracted bids totaling $19.3 billion, with $9.5 billion sold. The notes will carry a coupon rate of 7.375%, with a $10,000 note selling for $9,931.60.
In the secondary market for Treasury bonds, prices of short-term governments ranged from a 7/16 point increase for two-year bonds to a 21/32 drop in three-year bonds. Intermediate maturities fell 13/32.
