Dow Slides 12.83; Market Waiting for Jobs Report
The stock market lapsed into a sluggish decline Thursday as investors cautiously awaited monthly statistics on employment.
The Dow Jones index of 30 industrials dropped 12.83 to 2,291.97.
“The professionals who are dominating this market right now figure that the employment news tomorrow will probably be a no-win situation,” said market analyst Thom Brown of Rutherford, Brown and Catherwood.
The employment figures, the first official measure of the economy’s performance in March, were scheduled for release today and were expected to show a weakening economy.
Market analysts said investors are trapped between their fear of recession and their concern about inflation, and chose to dump stocks rather than remain exposed if the report takes an unexpected direction.
Declining issues outnumbered advances by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 581 up, 842 down and 538 unchanged.
Big Board volume totaled 146.53 million shares, down from 165.88 million Wednesday.
Pocket of Optimism
“The market is concerned about the risk of a steep decline and its ancillary impact on earnings,” said research director Monte Gordon of Dreyfus Corp.
In a period of uncertainty, Gordon said, the market usually heads lower. But he also said share prices did not fall too far Thursday, perhaps indicating a pocket of optimism among some investors.
Traders said whatever money entered the market Thursday found its way mainly into takeover stocks.
SmithKline Beckman, the most active shares on the New York Stock Exchange, rose 3 1/8 to 67 1/4 on rumors that Du Pont Co. would make a bid for the drug company at $85 a share, traders said. Britain’s Beecham Group PLC is discussing a possible merger with SmithKline.
Traders said Nestle SA has also been rumored to be a suitor for SmithKline.
Another drug company, Syntex Corp., gained 5/8 to 43 3/8 on rumors that it is a takeover target. Syntex declined comment.
Shares of Contel Corp. rose 2 to 54 7/8 on rumors that the company may merge with Centel Corp., or sell some of its assets.
The stock of Texas Air Corp. fell 1/4 at 13 1/2. The company agreed to sell its Eastern Airlines unit to a group led by Peter V. Ueberroth, the former baseball commissioner, for $463.9 million.
Shares of International Lease Finance Corp. tumbled 3 to 21 7/8 on lower-than-expected first-quarter profit.
Shares of Compaq Computer gained 1 1/8 to 71 1/4 after the company said it expects first-quarter earnings to exceed its year-ago results.
Losers among the blue chips included General Motors, down 3/8 at 39 1/2; American Express, down 3/8 at 32 1/2; Ford Motor, down 5/8 at 46 7/8, and General Electric, down 1/4 at 44 3/4.
In Tokyo, the 225-issue Nikkei stock average, which rose 48.54 to a record high Wednesday, shed 365.01 points, or 1.1%, to finish trading at 32,995.78. It was the index’s second-largest decline this year, after a 366.21-point drop March 20, when it finished at 31,654.80.
Share prices also fell sharply on the London Stock Exchange. The Financial Times 30 share index closed 21.2 points lower at 1,684.2. The Financial Times-Stock Exchange 100 index fell 25.7, or 1.23%, to 2,052.5. And the Financial Times 500 index closed down 14.37 at 1,167.84.
CURRENCY
The dollar was generally higher in listless trading as the foreign exchange markets awaited the fresh economic figures from Washington.
Gold prices advanced slightly. Republic National Bank of New York quoted a late bid of $383.60 an ounce, up 30 cents from late Wednesday’s $383.30.
The dollar moved in a narrow range as many traders in New York chose to sit out the session and wait for today’s release of unemployment figures for March.
If the report from the Labor Department shows continued economic strength, the dollar could rise on the expectation that interest rates will continue to go up. Higher U.S. interest rates are bullish for the dollar because they make the U.S. currency more attractive to foreign investors.
Traders were also cautious before next week’s release of U.S. trade deficit figures for February, said Robert Ryan, a senior trader with Irving Trust Co.
The dollar began its day in Tokyo, where it closed at 132.15 yen, up from 131.37 yen. Later, in London, the dollar traded lower at 132.08 yen, but the U.S. currency moved higher in New York, closing at 132.275 yen, up from 131.555 yen late Wednesday.
In London, one British pound cost $1.7035 late Thursday, more expensive for buyers than Wednesday’s late $1.7028. But the pound slipped in later New York trading to $1.7005 from $1.7030 late Wednesday.
Gold bullion prices were higher, but traders said there was little interest in the metal. In London, gold traded at a late bid of $384.75 an ounce, up from $383.50 Wednesday. The late Zurich price was bid at $384.35, up from $383.35.
In New York, an ounce of gold for current delivery closed at $384 on the Commodity Exchange, up 20 cents from late Wednesday’s $383.80.
CREDIT
The bond market also was chilled as prices of government securities edged lower in dull trading. Corporate and municipal debt prices rose slightly.
The Treasury’s benchmark 30-year bond fell 3/16 point, or $1.88 per $1,000 in face amount, while its yield rose to 9.04% from 9.01% late Wednesday.
News that ordinarily would have been somewhat bullish for the bond market was overshadowed by the employment report for March due today from the Labor Department.
“Everybody’s so focused on the one factor that the market totally stagnates,” said Kim Rupert, a vice president at MMS International in Redwood City, Calif., explaining the slow trading.
“When you’re staring down the barrel of the employment report you tend to freeze,” agreed Robert Falconer, senior vice president of CRT Government Securities Ltd.
In the secondary market for Treasury bonds, prices of short-term governments fell 1/16 point to 1/8 point, intermediate maturities fell about 1/4 point and long-term issues fell 3/32 point, the Telerate Inc. financial data service reported.
In corporate trading, industrials were marginally higher. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.19 to 300.28.
Interest rates on 52-week Treasury bills rose in Thursday’s auction to the highest level in more than four years. The Treasury Department sold $9 billion of the bills at an average discount rate of 8.75%, up from 8.68% at the last auction March 9.
The federal funds rate, the interest on overnight loans between banks, traded at 9.81%, about normal and up from 8.5% late Wednesday.
COMMODITIES
Cocoa prices tumbled on both sides of the Atlantic amid talk of a global surplus and forecasts of a record world crop in 1989.
May cocoa futures fell $35 to $1,300 a ton on the New York Coffee, Sugar & Cocoa Exchange.
“Especially in the nearby months, it was a major loss here today,” said Arthur Stevenson, analyst in New York with Prudential-Bache Securities. “This is really a depressed market.”
In London, prices dropped to their lowest levels in more than 12 years. London cocoa dealers estimated a current world surplus of 199,000 tons--a fifth straight surplus year. Cash prices hit 24-week lows and could fall further, dealers said.
On other futures markets, energy prices were mixed, livestock and meat slumped and precious metals were fairly steady.
New York cocoa prices fell on speculative trading before the April 17 expiration of the May contract and pessimistic chart forecasts, traders said. Recent weakness in May futures, relative to later months, added to speculative selling as traders feared light demand for next-month deliveries.
Livestock Mostly Lower
Arabica coffee futures dropped amid news of stalled talks at the International Coffee Organization meeting in London. Traders feared that a setback could block an accord to keep producers from giving discounts to non-ICO members.
Corn prices rose because of recent purchases of American corn by the Soviet Union. Moscow has bought nearly 3 million tons of corn since March 28.
Most livestock and meat futures prices were lower on the Chicago Mercantile Exchange.
Cattle settled 0.38 to 0.52 cent lower, with the contract for April at 77.67 cents a pound; feeder cattle were 0.70 cent lower to 1.20 cents lower, with April at 78.67 cents a pound; live hogs were 0.07 to 0.60 cent higher, with April at 39.97 cents a pound, and frozen pork bellies were 0.52 cent higher to 0.40 cent lower, with May at 34.40 cents a pound.
Precious metals were steady on the Commodity Exchange in New York. Gold settled 10 to 20 cents higher, with the contract for delivery in April at $384 an ounce; silver was 0.2 cent higher to 0.5 cent lower, with April at $5.80 an ounce.
Energy futures prices were mixed on the New York Mercantile Exchange. Analysts said the market was pausing after last week’s huge run-up after the Alaskan oil spill disaster.
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