Stocks Manage a Small Gain; Dow Climbs 1.83
The stock market managed to close on the upside Tuesday despite downward pressure that wiped out most of its daylong gains.
Analysts said a selloff in the bond futures market, together with concerns about events at the OPEC meeting in Geneva and another drop in the price of International Business Machines stock combined to put a damper on prices.
A small fire at the New York Stock Exchange forced suspension of trading between 1:44 p.m. EDT and 2:40 p.m.
The Dow Jones average of 30 industrials, up by nearly 8.84 points in late morning, was losing more than 4 points near the close before it recovered to post a gain of 1.83 for the day, closing at 1,800.20.
Decliners outpaced gainers by 801 to 659, while 478 issues were unchanged on the New York Stock Exchange.
Big Board volume totaled 116.82 million shares, against 54.99 million in the previous session.
“It was one big obstacle course,” said Hildegarde Zagorski, an analyst at Prudential-Bache Securities. “It started with oil stocks falling apart because . . . the OPEC meeting looked like it might fall apart. Then there was IBM, going down the chutes, and the fire, which disrupted things.
“We never got back to where we were, up almost 9 points, by 11:30 in the morning,” she said.
Concerns Over OPEC Meeting
In Geneva, members of the Organization of Petroleum Exporting Countries have been attempting for more than a week to devise a new system of sharing production cuts to bolster prices.
Until this week, OPEC observers have generally agreed that the 13-nation cartel would probably agree to extend its current two-month quota system that expires on Oct. 31.
But then Saudi Arabia joined Kuwait in declaring opposition to that idea, saying it wanted a new system that includes a higher output quota for itself.
This development raised anew the possibilty that the talks could collapse, bringing a new plunge in world oil prices and further hurting oil companies, which are already suffering from the yearlong price slide.
Early in the afternoon, New York Stock Exchange trading was suspended for nearly an hour when a fire broke out in a fifth-floor administrative office.
The exchange’s busy trading floor was evacuated because of smoke from a fire upstairs, officials said. One construction worker suffered minor burns.
After trading resumed, a rumor swept markets that the government’s report on September retail sales, scheduled for release Wednesday, would show a sharp increase, analysts said.
“There was a rumor going around late in the day that retail sales would be up over 5% tomorrow morning,” said Jay Goldinger of the Beverly Hills investment banking firm of Cantor, Fitzgerald & Co. “You have a lot of people very worked up that inflation is coming back.
“That is the overriding concern in the market right now.”
That sent bond futures tumbling, since it indicated that the economy may be strengthening and that there would be no more interest rate cuts--or that interest rates may even rise.
Higher interest rates are bad for stocks, since they mean companies must pay more to borrow money.
International Business Machines led the list of most active issues on the New York Stock Exchange, dropping 1 1/8 to 120 7/8. In its third-quarter earnings report issued Monday, the company said its profits were down by 27% from the year-earlier period.
Among other technology issues, Burroughs was down 1 at 69 1/8, while Honeywell, which on Tuesday said its profit fell nearly 42%, closed at 66 1/2, down 1.
Chase Manhattan was down 3/8 at 36 after saying its third-quarter earnings fell 7.4%. J. P. Morgan & Co lost 3/8 to 83 1/2; it reported flat earnings. BankAmerica was down 7/8 at 13 5/8.
Among airlines, AMR was up 3/8 at 60 3/8, Delta was up 1, at 49 3/4, Pan Am was up 1/8 at 5 7/8 and UAL was up 1/2 at 58.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 138.446 million shares.
Standard & Poor’s index of 400 industrials fell 0.53 to 260.66, and S&P;’s 500-stock composite index was down 0.54 at 235.37.
In all, 2,316 blocks of 10,000 or more shares traded Tuesday on the NYSE, compared to 948 on Monday.
Bond Prices Slide
In the bond market, the U.S. Treasury’s key 30-year bond fell about $10 per $1,000 face value and its yield rose to 7.79% from 7.68% late Friday. (The market for Treasury bills, notes and bonds was closed on Monday in observance of Columbus Day.)
In the secondary market for Treasury bonds, prices of short-term governments fell 3/16 point, intermediate maturities fell 21/32 and 20-year issues were down 11/16 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.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.32 to 117.14. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, fell 6.04 to 1,224.13.
In corporate trading, industrials fell 5/8 point and utilities fell 3/8 point in light trading.
Among tax-exempt municipal bonds, general obligations fell point and revenue bonds were down 1/8 point. Trading was light.
Yields on three-month Treasury bills were up 8 basis points to 5.14%. A basis point is one-hundredth of a percentage point. Six-month bills rose 6 basis points to 5.18%, and one-year bills were up 8 basis points at 5.36%.
The federal funds rate, the interest on overnight loans between banks, traded at 5.8125%, up from 5.75% late Friday.
