Dow Declines 3.42 in Another Quiet Session
Stock prices hovered in a narrow range Wednesday, continuing their recent sluggish trend in a slow session.
The Dow Jones index of 30 industrials dropped 3.42 to 2,683.89.
Advancing issues and declines ran about even in nationwide trading of New York Stock Exchange-listed stocks, with 697 up, 726 down and 547 unchanged.
Big Board volume came to 136.64 million shares, down from 141.61 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 164.94 million shares.
Analysts said stocks had apparently pulled back enough since they hit a record high before Labor Day to attract a little catch-up buying by investors who had been waiting for an opportunity to increase their stock holdings.
But brokers also noted uneasiness about the market’s uninspired showing Tuesday, when the Dow Jones industrials gave up a gain of about 10 points to finish down 0.19.
Upjohn dropped 1/4 to 36 1/8 in active trading. The Food and Drug Administration said an advisory committee was investigating the safety of Upjohn’s prescription sleeping agent Halcion.
AMR, whose American Airlines subsidiary posted fare increases to take effect next week, rose 2 1/8 to 78 5/8.
One notable area of strength in the market was closed-end investment companies specializing in securities of individual countries or regions of the world outside the United States.
These issues have been in demand of late, with several offerings of new “country” funds scheduled to come to market in the near future.
In Wednesday’s trading, Thai Fund jumped 2 1/2 to 21 1/4; Italy Fund 3/4 to 10 7/8; Germany Fund 1/2 to 11, and Spain Fund 3/4 to 22 1/2.
In Tokyo, share prices on Tokyo Stock Exchange declined slightly. The 225-issue Nikkei stock average fell 0.49 points, or 0.001%, to finish at 34,470.58.
In London, the Financial Times-Stock Exchange 100-share index closed at 2,369.6, up 8.3 points, or 0.4%.
The credit market suffered a broad setback, with yields jumping for both short-term Treasury bills and long-term bonds.
Dealers were at a loss for explanations for the losses, although some put part of the blame on a decline in the dollar.
The Treasury’s benchmark 30-year bond fell 13/16 point, or more than $8 per $1,000 face amount, while its yield, which rises when prices fall, increased to 8.16% from 8.09% late Tuesday.
The decline in bonds came in light trading, although not as light as earlier in the week. The bond market was “relatively terrible,” said Gib Clark, chief trader at Daiwa Securities America Inc.
In the secondary market for Treasury bonds, prices of short-term governments fell 1/4 point, intermediate maturities fell 1/2 point and long-term issues were down almost 1 point, according to Telerate Inc., the financial information service.
The Federal Reserve injected reserves into the banking system, but the step was regarded as a technical move to relieve upward pressure on the federal funds rate at the end of a two-week reserve measurement period.
In spite of the fresh reserves, the federal funds rate, which is the interest on overnight loans between banks, ended the day at 9.75%. That was up from 8.875% late Tuesday.
The dollar slumped in skittish trading as investors worried that West Germany might raise its interest rates.
Gold prices moved higher.
Analysts said the dollar was buffeted by rumors the Federal Reserve was intervening in the market to push the already weak U.S. currency lower.
Also troubling traders was the prospect that the West German central bank, the Bundesbank, would move interest rates in that country higher today. Such a move, unless matched in this country by the Fed, would likely weaken the dollar.
Overseas dealers said Saturday’s planned meeting of financial officials from the Group of Seven industrial nations added to traders’ qualms. The market was concerned that participants in the meeting might want to see the dollar decline.
The dollar fell against the British pound. In London, sterling was quoted at $1.5820, up from $1.5720 late Tuesday, and in later New York trading it was quoted at $1.5835, up from $1.5710.
In Tokyo, the dollar rose 0.52 yen to a closing 146.25 yen. Later, in London, it dipped to 145.55 yen and in New York, it slipped to 145.10 yen from late Tuesday’s 145.85.
In gold trading in New York, an ounce of the precious metal picked up $3.70 to close at $364.90 in trading on the Commodity Exchange. Republic National Bank later quoted a bid of $363.60 for an ounce of gold, up $3.60 from late Tuesday.
Gold traded late in London at a bid price of $363.25 an ounce, up from $360.50 late Tuesday.
In Zurich, Switzerland, the closing bid price was $363.50, up from $360.50 late Tuesday and in earlier Hong Kong trading, gold fell 34 cents to close at a bid $361.42 a ounce.
Silver rose 5.8 cents on the Commodity Exchange in New York, closing at $5.119 an ounce. In earlier London trading, silver was quoted at a bid price of $5.13 an ounce, up from Tuesday’s $5.09.
Coffee futures prices surged on New York’s Coffee, Sugar & Cocoa Exchange amid developments that at least momentarily appeared to improve the chances for a resumption of export quotas to support coffee prices.
On other markets, futures prices for energy, precious metals, grains and pork all advanced, while cattle futures prices declined.
Coffee futures settled 1.88 to 3 cents higher, with the contract for delivery in December at 82.55 cents a pound of green, unroasted coffee.
The market, which had languished for most of the day, surged late in the session on news that President Bush had offered support to Colombian President Virgilio Barco for a revival of coffee export quotas.
Coffee prices have fallen by about a third, hurting Colombia’s economy, since the International Coffee Organization suspended export quotas in July due largely to U.S. dissatisfaction with the system.
But the market quickly lost interest in the letter from Bush after learning the President had not altered the United States’ previously stated conditions for rejoining the coffee pact: no more sales of coffee to non-member nations and greater availability of high-quality arabica coffee beans.
The letter quickly was replaced by another ostensibly bullish factor--a report that Jorge Cardenas, president of the Colombia National Coffee Federation, would meet in Washington on Friday with U.S. trade negotiator Robert Murphy before both of them travel to London for a two-week meeting of the International Coffee Organization beginning Monday.
The report renewed speculation that U.S.-Colombian cooperation would lead to a new agreement.
Energy futures rose sharply on the New York Mercantile Exchange, led by the gasoline market on fears of Hurricane Hugo’s threat to refinery operations in the Caribbean Sea and the U.S. Gulf Coast.
Gold and silver futures rose strongly on New York’s Commodity Exchange in response to oil’s gains and a weaker dollar.
Grain and soybean futures ended mostly higher on the Chicago Board of Trade, boosted by fears of frost and hopes for new export sales of U.S. grain.
On the Chicago Mercantile Exchange, frozen pork belly futures soared the 2-cents-a-pound daily limit in a rally inspired by technical factors, analysts said.