News on Drexel Taken in Stride; Dow Dips 4.28
The stock market posted a modest loss Thursday, registering no strong response to news of a settlement in the insider trading case of Drexel Burnham Lambert Inc.
The Dow Jones index of 30 industrials, down 8.04 over the two previous sessions, dropped 4.28 to 2,160.36.
Declining issues slightly outnumbered advances in nationwide trading of New York Stock Exchange-listed issues, with 722 up, 764 down and 514 unchanged.
Big Board volume came to 150.51 million shares, up from 147.25 million Wednesday. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 189.79 million shares.
After the close Wednesday, Drexel, the powerful investment banking firm known for its expertise in takeovers and “junk bonds,” announced an agreement to plead guilty to six counts of securities fraud and to pay $650 million in fines.
Analysts noted that investors had many months to anticipate the prospective outcome of the inquiry because of the long insider trading investigation by the government.
On the Tokyo Stock Exchange, stocks firmed in thin, featureless trading. The 225-share Nikkei index gained 76.42, or 0.26%, to 29,774.61, extending Wednesday’s 130.25-point gain.
In London, share prices closed lower after a quiet session. The Financial Times-Stock Exchange 100-stock index slipped 3.9, or 0.2%, at 1,768.7.
COMMODITIES
Prices of coffee futures fell sharply on New York’s Coffee, Sugar & Cocoa Exchange, ending a six-day rally amid profit taking on signs that a Brazilian dockworkers strike was near an end.
Futures prices for green, unroasted coffee settled 5 to 6.55 cents lower, with the contract for March delivery at $1.4939 a pound.
On other exchanges, precious metals futures continued to rise, grains and soybeans were mixed, livestock and meat futures were mixed as well, energy futures rose and stock index futures retreated.
Trading activity on most markets was light, with many independent traders starting the Christmas weekend early. Most U.S. futures markets will close at noon local time today and reopen Tuesday morning.
CREDIT
Bond prices finished mixed in quiet trading. The Treasury’s 30-year bond edged up about 1/16 point, or 62 cents for every $1,000 in face value. Its yield, which is often an indicator of interest rate trends, slipped to 8.93% from 8.94% late Wednesday.
Analysts noted that bond prices showed little reaction to a government report that orders for big-ticket durable goods, excluding the volatile defense category, shot up 1.8% in November--the best showing since August.
The bond market also was unmoved by the news about Drexel.
In the secondary market for Treasury bonds, prices of short-term government issues were 1/16 point higher to 1/8 point lower, intermediate maturities declined 1/16 point to 3/16 point and 20-year issues rose 5/32 point, according to Telerate Inc., a financial data service.
The federal funds rate, the interest on overnight loans between banks, was quoted late at 8.8125%, up from 8.75% late Wednesday.
CURRENCY
The dollar rose against most major currencies, and gold prices also edged higher.
Business was so light, however, that many banks stopped dealing directly with each other and instead made deals through international brokers who match buyers and sellers, said Jerry Egan, senior trader of the Bank of Boston.
The dollar gained against the British pound. In London, it cost $1.7990 to buy one pound, cheaper than $1.8065 Wednesday. In New York, it cost $1.7988, cheaper than $1.8065 Wednesday.
In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 0.40 yen to a closing 124.62 yen. Later in London, it was quoted higher at 124.65 yen. In New York, the dollar rose to 124.68 yen from 124.55 yen.
On the Commodity Exchange in New York, gold bullion for current delivery rose to $418 an ounce from $415.30 Wednesday. Later, Republic National Bank of New York said gold was bid at $417.60 an ounce as of 4 p.m. EST, up from $415.
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