Dow Manages 1.52 Gain After Seesaw Session
The stock market ended modestly higher Wednesday after a seesaw session in which prices were pushed up and down by program trading.
Continuing takeover speculation kept several airline stocks aloft and also benefited share prices of a few other companies.
The Dow Jones index of 30 industrials, which bounced between double-digit gains and losses, finished ahead by 1.52 at 2,728.15.
Advancing issues outnumbered declining ones by about 11 to 9 in nationwide trading of New York Stock Exchange-listed stocks, with 795 up, 650 down and 537 unchanged.
Big Board volume totaled 174.35 million shares, little different from the 175.21 million shares traded Tuesday.
The market sported moderate gains in the morning before rounds of futures-related program selling rocked stocks in the afternoon and temporarily knocked down prices.
Stock prices bobbed back up, however, amid renewed buying when traders seized opportunities to profit from the price difference between stock index futures and actual stocks.
A government report that furnished further evidence of economic health failed to have much impact on Wall Street. The Commerce Department said U.S. personal income rose 0.7% in July, the best gain in four months, while consumer spending climbed at its fastest pace since April, up 0.7%.
With the economy apparently doing better than previously believed, it is much less likely that the Federal Reserve Board will nudge interest rates lower to stimulate growth, analysts say.
An upward revision in the gross national product, the broadest measure of the economy’s performance, reported Tuesday already had diminished hopes that the central bank would cut interest rates.
Takeover speculation continued to steer investors toward airline stocks. AMR, parent of American Airlines, spurted an additional 1 1/4 to 92 3/4, adding to Tuesday’s gain of 10 1/4. AMR reportedly has hired investment banks to help defend itself against unwanted suitors.
Pan Am was up 1/8 at 4 1/8; Delta rose 1 3/4 to 84; UAL, owner of United Airlines, rose 2 3/4 to 280, and Southwest Airlines gained 1 3/4 to 30 1/4.
Among the actively traded blue chips, Philip Morris rose 3/4 to 163 1/2 on word of a 22.2% increase in its dividend and a 4-for-1 stock split.
Other active blue chips included: General Motors, up 1 5/8 to 48 3/4; International Business Machines, up 1/2 to 116 7/8; Exxon, up 1/8 at 43 7/8; General Electric, down 1/4 at 58, and American Telephone & Telegraph, up 5/8 at 40.
In Tokyo, a selloff of some electrical stocks on talk of downward earnings revisions dragged share prices to a broadly lower close in thin trade. A sharp drop by the dollar overnight added a further reason for many cautious institutions to stick to the sidelines, brokers said. The 225-share Nikkei average lost 215.99 to close at 34,471.66.
Stocks ended virtually unchanged in London in tame trading. The Financial Times 100-share index added 0.5 to 2,381.3 after staying within a narrow range all day.
Credit
Bond prices edged up in the credit markets in lackluster, end-of-summer trading.
The Treasury’s benchmark 30-year bond rose 9/32 point, or nearly $3, for every $1,000 in face amount. Its yield dropped to 8.17% from 8.21% late Tuesday.
The bond market showed little reaction to the Commerce Department’s reports on the rise in personal income and consumer spending, because the figures roughly met expectations.
Bond traders have pretty much given up hope that the Fed will lower interest rates to stimulate the economy, since the economy already seems to be growing healthily, said Hugh A. Johnson, a senior vice president at First Albany Corp.
“The market is in the process of adapting to the new reality, and that is that the Fed is not going to change policy for the next two to four weeks,” Johnson said.
In the secondary market for Treasury bonds, prices of short-term government issues rose about 1/8 point, intermediate maturities rose about 1/4 point and long-term issues were up about 9/32 point, according to Telerate Inc., a financial information service.
The movement of a point equals a change of $10 in the price of a $1,000 bond.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.875%, unchanged from late Tuesday.
Currency
The dollar rose sharply against key foreign currencies after a mixed performance overseas.
Gold prices slipped. On the Commodity Exchange in New York, gold bullion for current delivery closed at $361.80 an ounce, down $1.80 from late Tuesday. Republic National Bank of New York quoted a late bid of $360.35, down $1.65.
Currency dealers said market sentiment toward the dollar was bullish after the release of the income and spending reports showing continued economic strength, which lessens the possibility of lower interest rates.
In Tokyo, where trading ends before Europe’s business day begins, the dollar fell 1.07 Japanese yen to a closing 143.08 yen. It was quoted higher in London at 143.33 yen, and in New York at 144.25 yen, up from 143.01 late Tuesday.
The dollar rose against the British pound. It cost $1.5815 to buy one pound in London, cheaper than $1.5945 late Tuesday. Sterling fetched $1.5779 in New York, down from $1.5870.
Commodities
Prices of copper futures rebounded on news of a strike vote by workers at a Chilean Copper Corp. mine, but gains were tempered by reports that labor troubles elsewhere may be easing.
On other futures markets, frozen pork belly prices remained strong, cattle and hog prices were mostly lower, wheat futures fell, corn and soybeans were mixed, precious metals declined and oil futures rallied.
In trading at the New York Commodity Exchange, copper settled 1 cent to 1.85 cents higher, with the contract for delivery in September at $1.29 a pound.
The market’s strong tone came from reports that workers at Chilean Copper’s El Salvador mine voted to strike Sept. 1, said Stephen Platt, a metals analyst with Dean Witter Reynolds Inc. in Chicago.
Although labor and management were continuing to talk after Tuesday’s vote, copper prices “closed firm over that strike uncertainty,” Platt said.
Pork belly prices held strong in trading at the Chicago Mercantile Exchange, where cattle and hog futures were mostly lower.
The bellies’ strength was tied to rumors of possible export sales of U.S. pork to Poland, while gains were tempered by a lack of strong market fundamentals.
Supplies remain abundant, and there’s been no sign that lobbying by pork producers has persuaded the Bush Administration to include pork in “in whatever charity package we’re going to be sending to Poland,” said Phillip Stanley, a livestock consultant in Chicago with DEC Futures Inc.
Live cattle settled 0.20 cent to 1.05 cents lower, with the contract for delivery in September at 72.50 cents a pound; feeder cattle were 0.37 cent lower to 0.05 cent higher, with September at 82.50 cents a pound; live hogs were 0.90 cent lower to 0.15 cent higher, with October at 40.77 cents a pound, and pork bellies settled 0.05 cent lower to 0.65 cent higher, with February at 43.17 cents a pound.
Wheat settled 2.50 cents lower to 1.25 cents higher, with the contract for delivery in September at $3.8575 a bushel; corn was 0.25 cent lower to 0.75 cent higher, with September at $2.3175 a bushel; oats were 2 to 2.50 cents lower, with September at $1.325 a bushel, and soybeans settled 3 cents lower to 1 cent higher, with September at $5.7925 1/4 a bushel.
