FINANCIAL MARKETS : Stocks : Dow Gains 10 as Huge Texaco Trade Caps Day
Stock prices gained ground Thursday in a session dominated by a record-sized transaction in Texaco shares just as the market closed.
The Dow Jones index of 30 industrials rose 10.48 points to 2,490.63.
Advancing issues outnumbered declines by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board came to 223.16 million shares, compared to 162.53 million in the previous session.
As the New York market was about to close, three big Wall Street firms handled a 42.32-million-share block trade of Texaco at 49, down 2 1/8 from Wednesday’s last price.
Traders immediately concluded that financier Carl C. Icahn had unloaded his position in the company to pursue other objectives, possibly involving USX Corp., in which Icahn also has long held a large stake. USX shares jumped 2 5/8 to 37 1/2.
The $2-billion-plus Texaco trade was the largest single block, as measured by dollar value, ever on the Big Board.
For most of the day, traders’ attention focused on the likely future course of the Federal Reserve’s credit policy.
Hopes have been increasing for some time in the financial world that the Fed might soon begin to ease credit, seeking to cushion a slowing economy against the risk of recession.
The picture of a dropoff in the pace of business was blurred a bit Wednesday by reports showing strength in factory orders and the index of leading economic indicators in April.
The Fed’s near-term strategy may be strongly influenced, analysts said, by the monthly statistics due out Friday on the employment situation in May.
Advance estimates call for the data to show an increase of about 200,000 in non-farm payroll employment, up from 117,000 in April but still well below the pace set in the first quarter of the year.
Aside from USX, gainers among the blue chips included Eastman Kodak, up 2 at 46 3/4; International Business Machines, up 3/8 at 110, and General Motors, up 7/8 at 41 1/4.
Federal Home Loan Mortgage Assn. preferred stock climbed 2 1/2 to 77 3/8 in active trading. Freddie Mac, as it is known, declared a 40-cents-a-share quarterly dividend on the preferred shares, and a sharply increased payout on its common stock, which is owned by the Federal Home Loan Bank Board.
On the Tokyo Stock Exchange, severe selling of domestic spending-related shares such as construction and steel pushed share prices down in heavy trading. The 225-share Nikkei index ended 285.40 points lower at 33,981.35.
British share prices closed weak but off their lows in moderate trading. The 100-share Financial Times index closed 11.0 points lower at 2,103.4.
Commodities
Feeder cattle futures prices soared on speculation that falling grain prices will encourage feedlot operators to buy more cattle to fatten.
On other markets, grains and soybeans ended mostly higher, bucking the recent trade; copper futures prices dropped sharply while precious metals rose and energy futures were mixed.
Feeder cattle settled 1.18 cents to 1.50 cents higher, with the contract for delivery in August at 77.95 cents a pound. Both the August and September contracts traded up the daily limit.
In other livestock and meat trading, live cattle were 0.15 cent to 0.78 cent higher, with June at 69.05 cents a pound; live hogs were 0.10 cent to 0.45 cent higher, with June at 48.32 cents a pound, and frozen pork bellies were unchanged to 0.65 cent higher, with July at 30.52 cents a pound.
The rally was rooted in perceptions that the sharp drop in corn and soybean futures prices over the past three weeks--a result of increased Midwest rainfall--would reduce feedlot operators’ feed costs, leaving them with more money with which to purchase cattle.
Most grain and soybean futures prices rose on the Chicago Board of Trade, bucking the recent trend and suggesting that the markets have absorbed as much rain as is likely to fall in the Midwest for at least a week.
“I think we probably have factored a lot of rainfall into these markets,” said Anne Frick, senior oil seed analyst with Prudential-Bache Securities Inc. in New York.
Copper futures prices fell sharply on New York’s Commodity Exchange, reflecting a supply expansion after two years of extreme tightness.
Copper consumption is entering a period of seasonal weakness, further contributing to the markets softening after a run to a record high of $1.6475 a pound in December.
Copper settled 2.45 cents to 3.25 cents lower, with June at $1.102 a pound.
Precious metals recovered slightly from Wednesday’s slide on the Commodity Exchange.
Gold settled 80 cents higher across the board, with June at $364.10 an ounce; silver was 3.5 cents to 3.8 cents higher, with June at $5.198 an ounce.
Oil futures prices were mixed in quiet trading on the New York Mercantile Exchange ahead of the start of an OPEC strategy meeting in Vienna.
Currency
The dollar finished mixed against major foreign currencies, failing to hold gains made as the West German central bank decided to leave its key interest rates unchanged.
Some traders thought the Bundesbank’s inaction was good news for the dollar because it meant investors would not pull money out of dollars to take advantage of higher West German rates.
A rally in the dollar began in anticipation of the decision by the Bundesbank’s policy-making council and faded soon after the actual announcement.
The dollar finished the day marginally higher against the West German mark, French franc and Italian lira and slightly slower against the Japanese yen, British pound, Swiss franc and Canadian dollar.
Some traders were looking ahead to today’s announcement by the Labor Department of employment figures for May, said Regina Morellino, a trader at Banque Indosuez in New York.
Many big players preferred to remain on the sidelines while finance ministers from the major industrialized nations met at the Organization for Economic Cooperation and Development in Paris, dealers said.
A West German rate hike would have followed similar moves by Japan, Switzerland and Britain. Those moves were largely targeted at the surging dollar, which had climbed above 2 West German marks in recent trading sessions.
In London, the British pound rose against the dollar to $1.5730 from $1.5682 late Wednesday. Later in New York the pound rose to $1.5776 from $1.5735.
In Tokyo, the dollar fell to 142.52 yen, down 0.18 yen from Wednesday. Later, in London, the dollar was quoted at 142.70 yen. In New York the dollar fell to 142.41 yen from 142.90 Wednesday.
Other late dollar rates in New York, compared to late Wednesday’s rates, included: 1.9820 marks, up from 1.9815; 1.7005 Swiss francs, down from 1.7098; 1.2053 Canadian dollars, down from 1.2072; 6.7240 French francs, up from 6.7195, and 1,436 Italian lire, up from 1,434.
Credit
Bond prices were little changed as investors squared their positions in advance of the government’s employment report for May.
The Treasury’s bellwether 30-year bond was off 1/32 point, or about 31 cents per $1,000 face amount. Its yield, which moves in the opposite direction from its price, was unchanged at 8.60%.
The market traded lower early in the day, but recovered some ground later as investors sized up their holdings ahead of the employment figures scheduled to be released this morning.
The federal funds rate, the interest on overnight loans between banks, was traded at 9.81%, down from 11% late Wednesday.
Tables begin on Page 5
