Stocks Edge Higher on Slowest Day in 2 Years
Wall Street stocks rose Monday with few fireworks on the slowest day of trading in more than two years, as investors hunted for bargains after last week’s steep decline.
The Dow Jones industrial index rose 12.71 points to close at 2,452.77. Advances led declines 753 to 592. Volume was extremely light with only 68.87 million shares trading hands, down sharply from 170.49 million shares Friday.
Traders said many participants had taken the day off before the Independence Day holiday today.
“I don’t think today’s activity means anything,” said trader Larry Greenwald at Sanford C. Bernstein & Co. “There’s no one around.”
At some brokerage houses only half the staff were at work. One analyst at a small firm said close to 80% of the workers at his office had taken the day off.
The volume on the Big Board on Monday was the lowest since Dec. 26, 1986, when about 48.9 million shares changed hands.
“We saw some bargain hunting and a few stocks creeping up, but there was no conviction,” said Charles Jensen, an analyst at MKI Securities Corp. He said recession concerns were still present, “but maybe now, people may pause and reflect.”
Among individual stocks, Digital Equipment Corp. added 3 1/4 to 95. Traders attributed the gain to a published report suggesting the stock could suddenly rise sharply.
Columbia Gas added 1 3/8 to 48 1/8 after First Boston recommended the stock to its clients.
Atlas Corp. rose 2 to 15 after Sunshine Mining Co. said it held about 5% of the mining company’s stock and was seeking talks about business ventures or combinations.
Airline issues generally moved higher. Analysts said bullish comments by Morgan Stanley analyst Kevin Murphy published in Barron’s helped lift the stocks.
Lin Broadcasting Corp.’s shares fell 1 1/4 to 114 5/8 on investor concerns that McCaw Cellular Communications may lower its $120-a-share bid for Lin, traders said.
Georgia Gulf rose 1 3/4 to 39 3/4 after investor Harold Simmons disclosed an 8.3% stake in the chemical firm, touching off speculation that he would attempt a takeover.
The Wilshire index of 5,000 equities closed at 3,146.487, up 9.479.
Large blocks of 10,000 or more shares traded on the New York Stock Exchange totaled 1,303, compared to 3,316 on Friday.
In Japan, the Tokyo Stock Exchange’s key index rose sharply despite a big setback for Japan’s governing Liberal Democratic Party in Tokyo elections. The Nikkei stock average of 225 selected issues, which fell 7.62 points on Friday, rose 287.73 points, closing at 33,236.42.
In Great Britain, share prices were stronger but off earlier peaks as the release of final British retail sales figures for May trimmed the market’s advance, dealers said. In London, the Financial Times-Stock Exchange 100-share index was up 14.6 points at 2,165.6, off its late morning best of 2,167.0.
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Credit
Government bonds gave a mixed performance during an abbreviated session, with long-term issues falling while other maturities made modest gains.
The volume of business in the credit markets was light, and trading ended earlier than normal ahead of the Independence Day holiday.
The 30-year Treasury bond, the market’s benchmark issue, fell 13/32 point, or just over $3.25 for every $1,000 in face value. Its yield, which moves in the opposite direction to price, finished trading at 8.06%, up from 8.03% late Friday.
“I think most of the people who ended up staying home did the right thing,” said Marilyn Cohen, president of Capital Insight, a Beverly Hills brokerage.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/32 point. The average yield to maturity declined to 7.20% from 7.29% late Friday. The size of the decline was due in part to the replacement of some high-coupon bonds in the index that were sparsely traded by newer issues with lower coupon rates, the Bond Buyer said.
In corporate trading, industrials were up. 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 0.08 to 327.52.
In the secondary market for Treasury securities, prices of short-term government issues rose 1/16 point to 5/32 point, intermediate maturities rose by 1/32 point to 3/32 point and long-term issues fell 11/32 point to 13/32 point, according to Telerate Inc., a financial information service.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, edged down by 0.23 to 1,185.64.
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Commodities
Coffee futures prices collapsed to an eight-year low as the International Coffee Organization suspended export quotas and traders positioned themselves for an expected surge in available supplies.
“I think it’s a bonanza for the American consumer,” said Bert Ruiz, a vice president with the New York brokerage firm Balfour Maclaine Corp., who predicted that wholesale prices of canned, roasted coffee would drop by 20 cents a pound.
On other markets, pork futures plunged their permitted daily limits, corn and soybean futures rallied strongly and precious metals advanced.
Oil futures were not traded Monday because the New York Mercantile Exchange was closed for the Independence Day holiday.
Green, unroasted coffee settled 6 to 16.07 cents lower on New York’s Coffee, Sugar & Cocoa Exchange, with the contract for delivery in July at 97.63 cents a pound and the most active contract, for September delivery, at 93.84 cents a pound. It was the lowest close since 1981, when coffee futures sank as low as 80.50 cents a pound.
The collapse was triggered by the International Coffee Organization’s decision to suspend quotas on exports of coffee from its producer members to its consumer members. The decision came after representatives of the 74 nations that comprise the organization, meeting in London, failed to muster majority support for either of two proposals for a new agreement to succeed the six-year pact expiring Sept. 30.
Both failed proposals would have retained a quota system for stabilizing coffee prices. Instead, the group approved a two-year extension of the current agreement, minus the quotas, which will keep the organization alive as a record-keeping body.
Ruiz said the suspension of quotas will increase the availability of high-quality coffees at lower prices, citing indications that some of the major South American and Central American coffee producers are sitting on large stockpiles.
“The market had a very hysterical reaction and it was mostly speculative,” said an analyst for a large trade house who asked not to be identified. “I don’t think it necessarily means anything.”
Pork futures tumbled their permitted daily limits on the Chicago Mercantile Exchange in reaction to Friday’s quarterly Agriculture Department hogs-and-pigs report, which showed more animals than the market had expected.
Gold settled $3.70 to $3.80 higher, with August at $381.10 an ounce; silver was 7.1 to 7.5 cents higher, with July at $5.23 an ounce.
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Currency
The dollar fell sharply amid speculation that the Federal Reserve will ease interest rates this week, and traders said they expected the currency to continue drifting downward.
The dollar broke key support at 1.9350 West German marks and closed at 1.93 marks, down from 1.9525 on Friday. The dollar ended at 141.25 Japanese yen, compared to 143.95 on Friday.
Many dealers sold dollars Monday after buying them last week in anticipation of a defeat for Japan’s ruling Liberal Democratic Party in local elections Sunday.
“Operators in Tokyo were very bullish on the dollar,” said Tom Benfer of Bank of Montreal. “But when the Bank of Japan sold dollars aggressively and there was not much depth to the market in London, the dollar continued to drop.”
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