Dow Index Edges Higher After a 3-Day Retreat
The stock market ended a three-day losing streak Friday after firm U.S. bond prices and computer-directed buying lifted sagging shares to a higher close.
However, the small advance was unable to offset the market’s earlier losses and the Dow Jones industrial index ended the week lower, halting a nine-week advance.
The 30-share Dow index, which was down 22 points at one stage Friday, recovered to finish up 2.66 points at 2,709.54. For the week, it dropped 42.55 points.
Advancing issues outnumbered declines by about 10 to 9 in the daily tally of nationwide trading in New York Stock Exchange-listed stocks, with 746 up, 685 down and 552 unchanged.
Volume on the floor of the Big Board came to 154.09 million shares, down from 160.16 million in the previous session.
Analysts said traders’ spirits got a small lift from declines in open market interest rates.
But doubts persisted about the chances for any concerted move in the near future by the Federal Reserve to relax its credit policy further.
That view, in turn, has reinforced suspicions among many market participants that stocks might be due for a pullback after their strong advance through the first eight months of the year.
Brokers say the market’s rise to record highs in late August also may have touched off some selling by investors who had been waiting “get out even” after suffering large paper losses in the crash of 1987.
F. W. Woolworth made the biggest contribution to the Dow’s gain, climbing 3 to 71 3/4. The company declined comment on persistent speculation in the market about a possible takeover or restructuring move.
Among other actively traded blue chips, Eastman Kodak rose 3/4 to 49 7/8 and Exxon gained 1/8 to 44 3/8, while General Electric slipped 1/8 to 56 1/2 and International Business Machines was down 1/4 at 116.
Airline stocks continued their recent pullback after a dramatic run-up this summer on buyout news and rumors. UAL lost 1 1/2 to 280 1/4, AMR fell 1 5/8 to 81 and Delta Air Lines retreated 3/4 to 74 1/2.
Abbott Laboratories added 1 1/8 to 62 7/8. The company repeated projections of record sales and earnings this year, and said directors authorized it to buy back as many as 10 million of its common shares.
The Tokyo stock market closed slightly lower on wobbly legs after a roller coaster ride in moderately active trading. The Nikkei 225-share index fell for the fourth straight day, easing 36.75 points to 34,115.81. The index initially rose and then fell sharply from its highs.
In London, share prices closed higher on London’s stock market. The Financial Times 100-share index closed up 8 points at 2,423.9.
Credit
Bond prices rose in quiet trading, tipped higher by economic statistics that were seen as an indication of a possible economic slowdown.
The Treasury’s benchmark 30-year bond rose 3/8 point, or $3.75 for every $1,000 in face value. Its yield, which falls when the price rises, dropped to 8.08% from 8.10% late Thursday.
Bond prices were supported by consumer installment credit figures released Friday, said Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc.
Despite a general economic slowdown due to Fed efforts to stem inflation, consumer spending--which accounts for two-thirds of economic activity--has continued at a relatively fast pace. A reduction in credit could indicate that consumers are slowing their spending pace.
Americans paid off $280 million more in credit than they borrowed during July, the first reduction in consumer debt in 2 1/2 years, the Federal Reserve Board said.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.938%, unchanged from late Thursday.
Currency
The dollar approached the peaks reached in its June rally as a comment by a Swiss national banker gave fresh confidence to bullish dealers in a thin market.
Jean Zwahlen, a member of the Swiss National Bank’s governing board, was quoted as saying that the dollar is likely to rise in the immediate future based on the strength of the U.S. economy.
Zwahlen also was quoted as saying the ability of central banks to restrain the dollar’s rise depends on the strength of market sentiment toward the U.S. currency.
The dollar was given another boost by a rumor, later denied by the Soviet embassy in Washington, that Soviet President Mikhail S. Gorbachev had died, said Lynn Tierney, a vice president at Shawmut Bank of Boston.
In Tokyo, where trading ends before Europe’s business day begins, the dollar fell to 146.62 Japanese yen from 146.87 yen late Thursday. Later, in London, it was quoted at a lower rate of 146.45 yen. In New York, the dollar moved up to 147.20 yen from 146.65 on Thursday.
In London, the dollar fell against the British pound. It cost $1.5505 to buy one pound, more expensive than $1.5460 late Thursday. In New York, the dollar gained ground as the pound fell to $1.5380 from $1.5520.
Commodities
Soybean futures prices staged a strong rally, bursting through the $6-a-bushel barrier on the Chicago Board of Trade amid rumors of Soviet demand for soybean meal and rising fears of a rain-delayed harvest.
On other markets, coffee and energy futures rose while livestock, meat and precious metals retreated.
Soybean futures settled 1.25 cents to 10.75 cents higher, with the contract for delivery in September at $6.075 a bushel, the highest settlement for a near-month soybean contract since Aug. 21.
Wheat futures settled 0.75 cent to 1.50 cents lower, with September at $3.955 a bushel; corn was 0.25 cent to 3 cents higher, with September at $2.395 a bushel, and oats were 1 cent to 1.75 cents higher, with September at $1.38 a bushel.
