Stocks : Profit Taking Slashes Prices; Dow Falls 12.10

A late burst of profit taking sent blue chips sharply lower Tuesday as investors unloaded stocks before the upcoming April jobs report, but the key Dow index still managed to close above the 2,400 level.

The Dow Jones index of 30 industrials fell 12.10 to 2,402.86, but most of the plunge was attributed to a 3 1/4-point drop in Eastman Kodak’s stock, a Dow component. Kodak closed at 43 7/8 after announcing a disappointing drop in its first-quarter earnings.

Wall Street had held firm for most of the day but sank in the last hour as a rush of selling, including computer-driven program trading, hit the market. Traders said some investors are hesitant to buy stocks before Friday’s report on U.S. employment in April.

“There was not a lot of selling pressure but not much buying power either,” said William Raftery, technical analyst at Smith Barney, Harris Upham & Co. Raftery said investors were “locking in whatever profits they have and letting prices drift lower.”

News that Kodak’s net income fell 23% to $200 million in the first quarter coincided with a shift to profit taking by investors eager to cash in on the market’s recent strength, traders said. The Dow industrials have risen for the past five straight weeks.

The Tokyo Stock Exchange’s main index climbed to a new high for the fifth consecutive trading day. The 225-issue Nikkei stock index closed at 33,954.99, up 161.82.

In London, share prices were mostly lower in lackluster trading as the Financial Times 100-share index was down 8.1 at 2,109.9.

Credit

Bond prices regained ground Tuesday as oil prices declined and the government issued two reports suggesting an economic slowdown.

The Treasury’s key 30-year bond, which lost nearly $7 for each $1,000 in face amount Monday, gained 15/32 point, or $4.69 per $1,000. Its yield eased to 8.95% from 8.99% late Monday.

Credit market strategists said government reports on housing sales and factory orders tended to bolster the prevailing view that the economy is easing.

In the secondary market for Treasury bonds, prices of short-term securities gained from 3/16 point to 1/4 point, intermediate-term governments rose 11/32 point, while long-term issues rose from 13/32 to 9/16 point, according to Telerate Inc., the financial reporting service.

The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 3.72 to 1,133.41.

Corporate bond prices also strengthened. Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.48 to 304.44.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/16 point to 925/32. The average yield to maturity was unchanged at 7.59%.

Yields on newly auctioned 3-month Treasury bills fell to 8.82% as the discount fell 7 basis points from the level at auction to 8.52%. Yields on six-month bills fell to 8.99% as the discount fell 15 basis points from Monday’s auction to 8.52%. Yields on one-year bills fell to 9.14% as the discount fell 12 basis points to 8.47%.

Currency

The dollar finished higher against several key currencies Tuesday, defying central bank attempts to dilute its value through coordinated selling on foreign exchange markets.

Gold weakened slightly. Republic National Bank of New York quoted bullion at $376.35 an ounce, down from $377.45 on Monday.

Currency strategists said the dollar’s behavior reflected a big underlying demand for the currency, a consequence of what they called the resiliently strong U.S. economy and relatively high American interest rates that make dollar-denominated investments more attractive.

The dollar fell early in the day when the Federal Reserve and central banks in other key U.S. trading partners sold the currency to blunt its appreciation.

In Tokyo, the dollar closed at 133.85 Japanese yen, up from 132.49 yen Monday. In London, the dollar traded at 133.82 yen. The pound cost $1.6845 in London late Tuesday, unchanged.

Other late dollar rates in New York, compared to late Monday, included: 1.8919 West German marks, up from 1.8907; 1.6842 Swiss francs, down from 1.6870; 1.1812 Canadian dollars, down from 1.1872; 6.3950 French francs, up from 6.3900, and 1,383.25 Italian lire, unchanged.

Commodities

Crude oil futures fell below $20 per barrel at the New York Mercantile Exchange on news that Saudi Arabia in April exceeded its Organization of Petroleum Exporting Countries oil production quota.

Domestic copper futures also fell sharply in reaction to an 8,200-metric-ton increase in London Metals Exchange stocks. At New York’s Commodity Exchange, spot copper fell 5.40 to 131.25 cents per pound. The price drop was started by larger-than-expected London stocks and sped along in late trading by speculator selling triggered by computerized sell strategies.

Orange juice prices continued their trek higher, with contract highs posted for the third consecutive day at the New York Cotton Exchange. Frozen concentrated orange juice contracts, which are traded at the exchange, have been supported by supply concerns in the United States and Brazil, traders said.

The actively traded July contract closed up 3 cents at 188.30 cents a pound.