FINANCIAL MARKETS : Stocks Mixed in Light Trading; Dow Gains 0.73
The stock market closed mixed in one of the slowest trading days of the year Monday as investors hibernated to await more news on the economy.
The Dow Jones index of 30 industrials rose 0.73 point to 2,337.79 after opening more than 4 points lower.
In the broader market, declining issues narrowly outnumbered advancers in nationwide trading of New York Stock Exchange-listed issues, with 762 issues down, 697 up and 521 unchanged.
Stocks initially fell on profit taking in the wake of Friday’s surge in prices, rebounded briefly then drifted through the remainder of the session as players retreated to await a government report today on consumer prices.
Volume on the floor of the Big Board came to 128.54 million shares, the fifth-slowest trading day of the year, down from 169.78 million in the previous session.
Analysts said despite Friday’s price rally after a report that March producer prices rose 0.4%, market participants preferred to remain cautious ahead of new statistics on the consumer price index.
“After the party on Friday and the CPI tomorrow, people are just taking the day off,” said Alfred E. Goldman, vice president of A. G. Edwards & Sons Inc. in St. Louis. “They don’t want to come in tomorrow and be hit with a Mike Tyson left hook.”
The market interpreted the producer price rise as a sign of easing inflationary pressures after rises of 1% in each of the previous two months. Stock analysts said the market is expecting a rise of between 0.4% and 0.6% in the March CPI, which measures cost of living, after a 0.4% increase in February.
Even before trading slowed, analysts said activity was light with many participants taking the week off in preparation for the Jewish holiday of Passover on Wednesday.
“That tends to lower the volume as people close out positions,” said Philip Puccio, senior vice president at Dillon, Read & Co. “They want to get out of the week relatively unscathed.”
Among actively traded issues, AT&T; rose 1/2 to 32 1/4, Burlington Resources gained 1 to 46 3/4 and McClatchy Newspapers advanced 1 5/8 to 19 1/4 after news of the death of C. K. McClatchy, its chairman and chief executive, apparently sparked takeover speculation, brokers said.
Control Data, meanwhile, fell 7/8 to 21 1/2, Reynolds Metals lost 1 7/8 to 55 1/8 and Newmont Mining dropped 2 3/4 to 36 1/2.
In Tokyo, share prices rose in slow trading Monday after U.S. data released Friday pointed toward a slowdown in the U.S. economy.
The Nikkei share index gained 157.89 points, or 0.48%, to end at 33,308.33 mostly on buying by individuals. Institutions are mostly staying on the sidelines, brokers said.
In London, stocks were little changed as investors awaited today’s inflation figures from the United States. The Financial Times 100-share index closed up 1.1 points at 2,054.7.
Credit
Most bond prices stagnated or dropped slightly Monday, reflecting dealer reluctance to speculate in advance of a potentially market-moving government report on consumer price inflation.
The Treasury’s key 30-year issue, which soared Friday in the biggest one-day gain of the year on news of unexpectedly low wholesale inflation, retreated about $1.875 per $1,000 in face amount. Its yield, which moves inversely to price, rose to 9.04% from 9.03% late Friday.
Credit market strategists said the Labor Department’s report on March consumer prices, due this morning, would provide bond investors with an important clue on the direction of the economy, inflation and interest rates. They attributed the slow trading to anxiety over what the figure would show.
The government figures on inflation have enormous power to affect bond prices because they provide a direct signal of whether the Federal Reserve will tighten, relax or maintain its credit policy.
Higher inflation means higher interest rates, which erodes the value of bonds. Lower inflation means eases pressure on interest rates, which raises the value of bonds.
Kathleen Camilli, a bond analyst at Drexel Burnham Lambert Inc., said the market was expecting a 0.5% increase in the March CPI. She said “an increase of anything less than that, and the market could continue to rally further.”
The federal funds rate, the interest on overnight loans between banks, traded at 9.875%, up from 9.8125% late Friday.
Tables, Page 24
