FINANCIAL MARKETS : Dow Slips 0.18 as the Market Hits a Standstill
Wall Street stocks stood nearly still Wednesday, with blue chips ending a fraction lower and the broader market a trace higher, as investors hugged the sidelines ahead of several economic reports.
The Dow Jones index of 30 industrials meandered around the 2,500 mark all day before closing at 2,503.36, off 0.18.
In the broader market, losers and gainers ended almost even after exchanging the lead numerous times. Advancing issues outnumbered declining ones by 20 issues in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board came to 170.54 million shares, up from 164.87 million in the previous session.
Market analysts said investors acted cautiously--shrugging off a firm bond market and a stronger dollar--ahead of Thursday’s April merchandise trade report and Friday’s May consumer price index.
Blue Chips Ease
“People are looking toward the CPI Friday and the trade report Thursday,” said Dale Tills, manager of institutional equity trading at Charles Schwab & Co. “Everyone’s on the sidelines.”
Analysts also said investors are wary because of the expected increase in market volatility related to “triple witching” time on Friday, when the June index futures, options and individual stock options all expire.
Blue chips started the day modestly higher but eased near midday on futures-related selling, which reappeared toward the end of the session.
Enduring concerns that the strength in the dollar will erode profits of multinational firms also weighed on the market, said Rao Chalasani, a market analyst with Prescott, Ball & Turben Inc. These concerns knocked stock prices back Tuesday, hitting the drug sector especially hard.
But some analysts said the market has used dollar worries as a pretext for taking profits following its gains last week.
“We took on too much of a price appreciation in a three-day span (last week),” said David Holt, a market analyst with Wedbush Morgan Securities. “Prices are now being brought back in line from a period of overindulgence.”
He said the drug company stocks, for example, which have been among the strongest gainers, were now in a corrective phase.
“People are using the dollar’s rise as an excuse to take profits (in drug stocks). But most drug companies have made a substantial move, and all large moves have to be consolidated or corrected,” he said.
In foreign trading, stock prices rose across the board in Tokyo in very thin trading Wednesday on buying by investment trust funds and program trading linked to trading in stock index futures. The 225-share Nikkei index closed up 189.44 at 33,402.99, retracing Tuesday’s 184.46-point drop.
On the London Stock Exchange, stock prices rallied to end the day higher as a steady British pound allayed worries of a rise in British interest rates. The Financial Times 100-share index finished 10.6 points higher at 2,133.6.
Commodities
A forecast for warmer, drier weather in the Midwest sent buyers swarming back to the grain markets, giving corn and soybean futures prices their biggest one-day boost in nearly 10 months.
“It was exciting,” said Pat O’Connell, an analyst with Chicago-based Refco Inc. who watched the feverish trading from the floor of the Chicago Board of Trade.
On other markets, crude-oil futures surged on supply jitters; precious metals advanced, and livestock and meat futures were mixed.
Soybeans for July delivery on the Board of Trade soared the permitted daily limit of 30 cents a bushel shortly before the close but finished with a gain of 28.50 cents at $7.295 a bushel. Other soybean contracts settled 17 cents to 21.75 cents higher.
The strongest corn contract, for July 1990 delivery, settled 9.25 cents higher, just 0.75 cent shy of the daily limit in that market. Other contracts advanced from 3.25 cents to 9 cents with the price for July, 1989, delivery settling at $2.5675 a bushel.
For both commodities, the gains marked the sharpest single-day rally since last Aug. 24.
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