Dow Up 2.85 as Trading Pace Increases a Bit
The stock market Tuesday managed its second gain in the past six sessions as trading picked up slightly from Monday’s snail-like pace.
The Dow Jones index of 30 industrials rose 2.85 to 2,707.26 after losing 5.13 Monday.
With no major influences on the market, stock prices fluctuated in a narrow range except for an early surge that briefly carried the Dow Jones industrials up about 14 points.
Stock prices had fallen in four of the five sessions preceding Tuesday’s rise amid continuing concern about the outlook for interest rates and the economy.
Since Labor Day, the Dow is off nearly 45 points. The market is looking for direction and may get some at the end of this week, when the government issues a slew of reports on the economy, including the trade deficit, inflation and factory output.
Traders attributed the brief morning rise Tuesday to a rally in Chicago that pushed stock index futures to a premium. That encouraged arbitragers to sell the futures and buy the underlying stocks.
“In these quieter periods the indexes have had more intra-day impact,” said Austin George, head of equity trading at T. Rowe Price Associates in Baltimore.
“It surely seems more like the middle of August than the middle of September,” George said.
Advancing issues outnumbered declining ones by nearly 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 824 up, 632 down and 535 unchanged.
Big Board volume totaled 142.14 million shares, up from 126.02 million on Monday, which had been the slowest day since July 3.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 172.15 million shares.
Datapoint led the list of actively traded NYSE issues, falling 1/2 to 5 3/8 on 2.7 million shares. New York investor Asher B. Edelman, Datapoint chairman, said he raised his stake to more than 40% by buying 3 million shares Monday and Tuesday. Martin S. Ackerman, a shareholder who is trying to kick Edelman off the board, said he would challenge the legality of the purchases.
Among other actively traded NYSE stocks, American Telephone & Telegraph rose 1/2 to 40 1/2, Warner Communications was unchanged at 64 1/8, McDonald’s was up 5/8 at 29 5/8, Exxon was up 3/4 at 45 3/8 and Unocal was up 2 5/8 at 57 3/4.
Semiconductor stocks rose strongly, with Texas Instruments up 7/8 to 41 1/8, Motorola up 1 1/8 to 56 5/8, Advanced Micro Devices up 1/8 to 8 1/2 and National Semiconductor up 3/8 to 7 5/8.
MiniScribe, the most actively traded over-the-counter stock, lost an additional 3/4 to 1 5/16 a share. The maker of computer data-storage devices said previous senior management perpetrated a fraud on investors by reporting exaggerated growth.
In Tokyo, a last-minute burst of futures-related buying boosted stock prices to end a five-day slump, but trading was thin and players remained cautious about rising interest rates.
The key 225-share Nikkei index jumped 219.22 to close at 34,332.88 after easing a scant 2.15 on Monday.
The Nikkei closed at the day’s high, leaping up largely on futures-related index-linked buying in the final hour. Buying by trust funds also supported the market, brokers said.
Meanwhile, share prices closed slightly lower in light trading on the London Stock Exchange.
The Financial Times-Stock Exchange 100-share index finished at 2,397.6, down 3. It hit a low of 2,386.6 within the first few hours of trading but later rebounded as high as 2,399.0 before the close.
Credit
Bond prices were mostly lower in quiet trading.
The Treasury’s closely watched 30-year bond fell 5/16 point, or $3.13, per $1,000 face amount. Its yield rose to 8.09% from 8.07%.
Shorter-term maturities ranged from slightly lower to slightly higher in price.
Market analysts said most traders kept a low profile while awaiting the economic reports due later this week.
In the secondary market for Treasury securities, prices of short-term government securities were unchanged to 1/32 point higher, intermediate governments were unchanged to 1/32 point lower while long-term issues fell between 5/32 point and 1/4 point, according to Telerate Inc., a financial information service.
The movement of a point equals a change of $10 in a $1,000 bond.
In the secondary market, yields on three-month Treasury bills auctioned Monday fell to 7.84% as the discount lost 4 basis points to 7.59%. Yields on auctioned six-month bills fell to 7.98% as the discount dropped 5 basis points to 7.58%. Yields on one-year bills were unchanged at 8.06% as the discount held at 7.52%.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8 7/8%, unchanged from late Monday.
Currency
The dollar was narrowly mixed Tuesday, marking time as traders awaited economic reports to be issued later in the week.
Gold prices also were mixed.
In overseas trading, there were unconfirmed rumors that the Bank of Japan intervened in Asian trading. No other central banks were sighted in the markets during the day.
In London, the dollar fell against the British pound. It cost $1.5470 to buy one pound, compared to $1.5450 late Monday. Later in New York, the pound rose to $1.5485 from $1.5460.
In Tokyo, the dollar fell 1.04 Japanese yen to close at 146.73 yen. Later, in London, it was quoted at 147.08 yen, and in New York, the dollar edged up to 146.905 yen from 146.70 late Monday.
In New York gold trading, Republic National Bank quoted a late bid of $385.50 an ounce, up 40 cents, and on the Commodity Exchange, gold edged up 30 cents to close at $359.50. Earlier in London, gold was unchanged at $358.75 bid.
Silver bullion prices rose in New York after holding steady in London. On the Commodity Exchange, silver rose 1.8 cents to close at $5.069 an ounce, and in London, the metal was unchanged at $5.08.
Commodities
Coffee futures prices plunged Tuesday on New York’s Coffee, Sugar & Cocoa Exchange on indications that the United States will not support a return to international export quotas that would raise coffee prices.
On other markets, sugar futures rose sharply, grains and soybeans were lower, energy futures weakened, precious metals advanced and livestock and meat futures were mixed.
All New York coffee futures except the contract for September delivery plunged the permitted daily limit of 6 cents a pound. The limitless September contract tumbled 6.68 cents to 81.48 cents a pound, a 2 1/2-week low.
Analysts said prices plummeted amid panicked selling prompted by a report that the Bush Administration will reject Colombia’s plea for U.S. support in pushing for a resumption of export quotas among producer members of the International Coffee Organization.
The 74-nation cartel suspended the quotas in July amid discord caused in part by U.S. demands for controls on sales of coffee at cut-rate prices to Soviet Bloc nations that are not ICO members. The United States is the organization’s largest consumer member.
Sugar futures prices soared in New York after the United States announced it had raised its 1989 sugar import quota by 860,000 metric tons to 1.99 million and had extended the import quota period by nine months to Sept. 30.
Sugar futures rose 0.37 to 0.54 cent, with October at 13.95 cents a pound.
Corn and soybean futures fell moderately on the Chicago Board of Trade, pressured by a lack of overnight frost in the Midwest and forecasts for improved crop weather next week. Oat and wheat futures also retreated.
After the close, the Agriculture Department issued a new crop report revising downward its August estimates for 1989 U.S. corn and soybean production and raising its wheat crop estimate.
The USDA projected the corn crop at 7.32 billion bushels, compared to its August estimate of 7.35 billion and last year’s harvest of 4.92 billion.
The agency pegged 1989 soybean production at 1.89 billion bushels, compared to last month’s estimate of 1.91 billion and last year’s harvest of 1.54 billion.
The USDA projected total 1989 U.S. wheat production at 2.06 billion bushels, compared to last month’s estimate of 2.04 billion and last year’s 1.81 billion.
