Financial Markets : Takeover Issues Soar, but Dow Gives Up 7.97
The stock market gave ground for the third straight session Wednesday in a late flurry of futures-related program selling, triggered by a weaker dollar and rising interest rates.
But once again takeover and transportation issues soared on a wave of buying interest. The Dow Jones index of 30 industrials dropped 7.97 to 2,464.91, bringing its loss since the start of the week to 21.47 points.
Declining issues outnumbered advances by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board came to 168.83 million shares, against 167.65 million in the previous session.
The dollar fell Wednesday afternoon against leading foreign currencies. And 30-year bond prices dropped about $5 for each $1,000 in face value, increasing their yields to the 8.33% to 8.35% range.
Analysts said a Fed report on economic conditions around the country helped ease market concern that the central bank might need to drive interest rates higher, but the report didn’t inspire stock-buying enthusiasm.
The report, known as the “beige book,” indicated that growth is slowing and inflationary pressures have eased in response to an anti-inflation campaign waged by the Fed.
Blue chips sagged after a firm opening but managed to edge higher in early afternoon trading, mostly on a gain in Philip Morris Cos.
Activity remained brisk in airline issues, most of which have been gaining since NWA’s recent agreement to be acquired for $121 a share.
NWA shares rose 5/8 to 114 3/8; Delta Air Lines 2 to 70 1/2, and AMR 1 1/8 to 64 5/8. However, UAL lost 1 1/4 to 132 1/4.
Action also centered on other possible takeover issues. Hilton Hotels Corp. rose 3 to 101 3/4. The company named Shearson Lehman Hutton Inc. and Eastdil Realty Inc. to advise on ways to maximize shareholder value. Hilton has previously been mentioned as a takeover target.
Time Inc. shares jumped 4 3/4 to 157 1/4. Paramount Communications Inc., which has made a hostile bid for Time, is pressing its challenge against the proposed Time-Warner merger.
Shares of Ferro Corp. rose 1 1/2 to 47 3/4, fueled by recurring speculation that the specialty chemical company would be the target of an acquisition attempt, traders said.
Syntex Corp., a pharmaceutical company frequently rumored to be a takeover candidate, rose 1 3/8 to 49 3/8. The company said it had no news to explain the stock movement.
Philip Morris gained 1 1/2 to 136 1/4 after Smith Barney, Harris Upham & Co. analyst Ron Morrow reiterated a strong buy recommendation on shares of the food and tobacco company.
Losers among the blue chips included USX, down 3/4 at 36 3/4; McDonald’s, down 1 5/8 at 28 1/4; Eastman Kodak, down 5/8 at 47 3/8; Union Carbide, down 1/2 at 28 3/4, and General Motors, down 5/8 at 40.
Two notable exceptions to the downtrend were American Telephone & Telegraph, up 1 at 36 1/4 1/4, and International Business Machines, up 1/4 at 109 3/4.
In foreign trading, stock prices rallied on the Tokyo Stock Exchange for the second straight session as a late-afternoon buying surge rescued a mostly lackluster trading day. The key Nikkei 225-share index added 111.81 points to finish at 33,345.28.
On the London Stock Exchange, shares firmed in a market subdued by a nationwide rail strike and similar action on London transport services. The Financial Times index of 100 shares gained 7.4 points to 2,172.2.
Currency
The dollar ended lower against all major currencies in thin, nervous trading following a mixed performance overseas.
Currency dealers said the dollar started out stronger overseas but slipped back after failing to sustain higher levels that are important to chart-watching analysts. The decline accelerated following reports of quiet dollar-selling intervention by the Federal Reserve, they said.
Ronald H. Holzer, chief dealer for Harris Trust & Co. in Chicago, said traders also were concerned that interest rates may soon rise overseas, especially after the European parliamentary elections, depressing the dollar’s value.
He said that feeling was underlined by remarks from West Germany’s central bank indicating dissatisfaction with the recent high dollar levels.
Commodities
The resignation of Federal Reserve Board member H. Robert Heller sparked strong rallies in the gold, silver and platinum markets Wednesday amid uncertainty about his departure’s impact on interest rates and inflation.
On other markets, copper futures plummeted, cotton and heating oil surged, pork bellies plunged and grains and soybeans were mixed.
Gold futures prices rose $6.10 to $6.90 on New York’s Commodity Exchange, with the contract for delivery in August at $375.70 an ounce; silver settled 4.7 to 5.1 cents higher, with July at $5.298 an ounce.
Platinum finished $6.90 to $7.70 higher on the New York Mercantile Exchange, with July at $501.80 an ounce, the contract’s first close above $500 since June 8.
The news that Heller was leaving the Fed to join the credit-card company Visa International triggered heavy buying during the last 10 minutes of trading on all the precious-metals markets, which benefit from inflation worries.
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