Dow Gains 15.09 to Close at 2,050 in Light Trading
Wall Street’s blue chip index closed higher Monday, bolstered by fresh takeover news, but volume was the lightest of the year as investors turned timid ahead of Thursday’s U.S. trade deficit report.
The Dow Jones industrial index rose 15.09 points in late trading to close at 2,050.07. The blue chip indicator had gained 8.95 points on Friday and has been struggling to regain the slippery 2,050 level.
But declining issues slightly outnumbered advances on the New York Stock Exchange, with 737 up, 794 down and 445 unchanged.
The advance in the Dow index lacked conviction as volume, at 131.8 million shares, was the lightest since Dec. 29 when 111.6 million shares were traded. On Friday, 200 million shares exchanged hands.
“The market was listless all day, never wavering more than just a few points in either direction,” said Eugene Peroni of Janney Montgomery Scott.
Analysts said many investors were sidelined, waiting for Thursday’s U.S. trade deficit report for the month of January.
Peroni said that, with months of experience in carefully watching the U.S. merchandise trade deficit, investors have not gotten over their fear that a deviation from forecasts could cause a sudden and unexpected swing in stock prices.
Even a steep drop in oil prices did not help the transportation sector, which posted only modest gains.
Also, there may be more incentive not to be heavily involved this week with the simultaneous expiration of index futures, index options and individual stock options occurring on Friday, he noted.
Element of Uncertainty
“Nobody was doing anything out there. The trade deficit is on Thursday and the triple witching hour is on Friday--there is no incentive to do anything,” said one trader.
But others said they were encouraged that the market made its biggest upward move at the end of the day, closing at the high point of the session.
On Friday, the market rebounded from a loss late in the session as well, and traders said Monday provided further indication of underlying market strength.
This week’s trade report will come just ahead of a quarterly “triple witching hour” involving a group of expiring options and futures on stock indexes.
The past few witching hours have been relatively uneventful with the adoption of new procedures designed to spread out the impact of last-minute maneuvering by computer program traders.
Nevertheless, analysts say uncertainty about how it will go this time has lent an added element of uncertainty to a marketplace still haunted by memories of the crash last fall.
Grolier Inc. led the active list, up 8 1/2 at 24 3/8. Hachette SA of France made a $21-a-share offer to acquire the company.
J. P. Stevens climbed 5 3/8 to 61 1/8. The company agreed to be acquired for $61.50 a share by an investor group.
Wolverine Technologies, which agreed to a merger with Ply-Gem Industries at $18.50 a share, jumped 4 1/8 to 18.
Homestake Mining fell 1 to 15. Mesa L. P. withdrew a $20-a-share takeover bid that Homestake had opposed.
One of the best gainers among the blue chips was Minnesota Mining & Manufacturing, up 2 at 61 1/8. The company said growth of its orders has increased so far this year from its pace in late 1987.
Other contributors to the Dow Jones industrials’ gain included Du Pont, up 1 at 87; Procter & Gamble, rising 1 3/8 to 81, and Eastman Kodak, up 1 3/4 at 43 1/2.
Gerber Products Co. rose after Merrill Lynch repeated a buy recommendation, saying that the stock has retreated to an affordable level as merger rumors waned, but that speculation is likely to return in the next few months. The stock of the food company rose 1 1/8 to 42 1/2.
Pilgrim’s Pride, a chicken producer and marketer, jumped 2 5/8 points to 7 after the company’s chairman sold his 80% stake to Tyson Foods for $9 a share.
Tokyo stock prices fell on Monday due to increasing caution among investors ahead of the release of the latest U.S. trade figures, brokers said in Tokyo.
The Nikkei 225-share index closed at 25,433.51 points, down 110.22 points from Friday’s close.
In London, the Financial Times 100-share index closed up 7.9 at 1,819.5.
