Stocks : Dow Off 5.14 as Investors Await Economic Data

Stock prices fell in sluggish trading Tuesday, as the market awaited new economic data later in the week.

The Dow Jones index of 30 industrials fell 5.14 points to 2,371.33, its eighth consecutive decline.

Declining issues outnumbered advancing ones by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks.

The market opened higher, but failed to sustain the early gains with uncertainty dominating the picture. Except for a brief spurt in the afternoon led by program selling, volume remained light. Analysts said the quietness reflected a lack of buying rather than selling activity.

Volume on the floor of the Big Board came to 150.09 million shares, up from 135.13 million in the previous session.

Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 180.3 million shares.

Analysts said the market remained cautious in anticipation of Friday’s government report on producer prices, which will provide another gauge of inflation.

A late drop in the bond market gave stocks a last-minute shove, following the first round of the Treasury’s three-day refunding.

In Tokyo, stocks closed lower Tuesday to snap a seven-day winning streak, as rising concern over the strong dollar triggered profit taking.

The key Nikkei index lost 103.37 points to finish at 34,031.87.

In London, stocks finished higher Tuesday, despite worries over higher European interest rates caused partly by the strong dollar.

The Financial Times 100-share index closed 5.5 points higher at 2,125.1.

Credit

Bond prices dropped sharply as traders began to fear that conditions might be right for a repeat of the sharp selloff that occurred three months ago.

The Treasury’s benchmark 30-year bond fell 1 1/32 point, or $10.31 for every $1,000 in face value. Its yield, which moves in the opposite direction from its price, rose to 9.09% from 8.99% late Monday.

The decline came despite a fairly successful auction of $9.79 billion in 3-year Treasury notes, the first leg of a massive refunding program that raises money for government operations.

The refunding auction occurs four times a year, and the last time, in early February, primary bond dealers were bloodied by a sudden surge in inflation fears.

The primary dealers, who buy bonds from the Treasury for resale, could be stuck again with a pile of unsalable securities if investors again become frightened about the inflation outlook, dealers said.

In Tuesday’s auction, yields on 3-year notes fell to 9.12%, the lowest level since November, when they were auctioned at 8.59%.

In total, the Treasury is selling $28.75 billion in government debt securities. It is scheduled to sell 10-year notes today and 30-year bonds on Thursday.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 9.6875%, down from 9.75% late Monday.

Commodities

Coffee futures prices climbed aggressively for the second straight day, reflecting worries about the tight availability of high-quality arabica coffee beans.

Coffee settled 0.81 cent lower to 2.75 cents higher on New York’s Coffee, Sugar & Cocoa Exchange, with the contract for delivery in May up 2.75 cents at $1.4125 a pound.

On other markets, pork futures were up strongly while cattle prices were mixed, energy futures rose, precious metals were higher and grains and soybeans were mixed.

Frozen pork belly futures soared the permitted 2-cents-a-pound limit on the Chicago Mercantile Exchange. Analysts said the rally was supported by strong cash markets but was mainly due to technical factors.

Petroleum futures prices rebounded from Monday’s steep losses on the New York Mercantile Exchange but the American Petroleum Institute’s weekly stockpile figures, which were released after the close, were expected to prompt new selling Wednesday.

Dollar

The dollar retreated slightly in choppy U.S. trading Tuesday as dealers turned cautious about buying the American currency.

Gold prices rose in the United States, after weakening in dealings abroad. Republic National Bank of New York quoted an ounce of gold bullion at $378 as of 4 p.m. EDT, $2.60 higher than the late bid Monday.

In U.S. trading, the dollar ended at 1.9094 marks, down slightly from 1.9097 on Monday, the highest point since August, 1988.

The dollar closed at 135.00 Japanese yen in Tokyo, up from 134.52 late Monday. In later London trading, the dollar traded lower at 134.80 and in New York it ended at 134.525, down from Monday’s closing rate of 134.89.