Seesaw Session on Wall Street; Dow Rises 5.87 : Trading Active as Decline in Dollar Adds to Jitters
Blue chip stocks managed gains in the last minutes of a cautious market Wednesday, as the broader market remained in a holding pattern before Friday’s jobs data and next week’s presidential election.
The Dow Jones industrial average closed up 5.87 at 2,156.83, while declining issues edged out advances by around 4 to 3 on active New York Stock Exchange volume of 161.3 million shares. Only 151.2 million shares changed hands Tuesday.
“It’s the same waffling of the past several days,” said analyst Brian Luedtke at Piper Jaffray & Hopwood. “We may stay in this range until after the jobs data Friday and the election next Tuesday.”
Little news emerged to bolster investor confidence during the day, traders said, as early intervention by the Bank of Japan and the Federal Reserve failed to stop the dollar’s afternoon fall to five-month lows.
Stock investors are nervous that the dollar’s decline could move the Fed to bolster the currency by nudging interest rates higher. Many market watchers had been anticipating stable interest rates recently as the economy showed signs of slowing down.
The U.S. currency’s fall is “making people very, very nervous,” said Hugh Johnson, senior vice president at First Albany Corp. in Albany, N.Y. “It obviously puts enormous pressure on the Federal Reserve.”
“The market is waiting for a catalyst to tell it where to go,” said technical research director David Holt of Morgan Olmstead, Kennedy & Gardner. “We keep looking for something to give it enough credibility to get momentum.”
Kodak Active
And the market may keep its jitters awhile after the national vote, Luedtke said. “It may take a couple of weeks for the market to readjust to the new political situation. Now, the market is not oversold,” he said.
After bobbing up and down through most of the session, stocks took a sudden brisk downturn in the early afternoon. Analysts attributed the move mainly to the dollar’s decline.
Among individual issues, Eastman Kodak shares were active and fell 1 3/8 to 46 1/8. Several Wall Street firms cut their earnings estimates and investment ratings for the photography giant after Tuesday’s report of disappointing third-quarter results.
Takeover stocks also highlighted trading, with Texaco Inc. up 1 to 48 1/8 on a report it is trying to lift its stock price and free itself of another proxy fight with corporate raider Carl C. Icahn.
Shares of RJR Nabisco, the NYSE’s second most active issue, rose 1 3/4 to 86 3/4. Nabisco’s management is still trying to match a $20.3-billion bid by leveraged buyout firm Kohlberg Kravis Roberts & Co..
Macmillan Inc. shares were up 1 to 89 1/2 on news that a Delaware Supreme Court issued a ruling to block the company’s $2.5-billion takeover by Kohlberg Kravis Roberts. Maxwell Communication PLC is offering a slightly higher bid for the publisher.
Northwest Airlines’ parent NWA Inc. rose 5/8 to 56 1/8 as investors focused on the firm’s undervalued assets, traders said. The stock rose 1 3/8 Tuesday.
Merck & Co. shares rose 1 3/4 to 59 after a Wall Street analyst said the firm’s new drug for treating prostate enlargement is proceeding rapidly in clinical trials.
Foreign Markets Down
In Tokyo, share prices ended the day slightly lower on Wednesday, breaking a seven-day winning streak after a strong start. The 225-share Nikkei index slipped 28.41 to 27,985.26.
Share prices also finished lower on the London Stock Exchange. The Financial Times 100-share index finished the day off 14.6, at 1,843.2.
