Dow Adds 9.12 Despite IBM’s Weak Showing
Stock prices finished mixed Wednesday in a session marked by pressure on some technology issues but strength in other blue chips.
The Dow Jones index of 30 industrials, up about 10 in early trading and down about 4 at mid-afternoon, added 9.12 to close at 2,673.06.
Declining issues outnumbered advances by nearly 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 626 up, 826 down and 514 unchanged.
Big Board volume totaled 158.40 million shares, against 158.35 million Tuesday. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 185.41 million shares.
The market had to contend with some renewed weakness in the dollar and an accompanying rise in credit market interest rates.
Stocks were also weighed down by International Business Machines’ disclosure that it expects its third-quarter earnings to come in well below analysts’ estimates.
IBM shares fell 6 to 111 1/2. Elsewhere in the technology sector, Digital Equipment dropped 1 3/8 to 93 5/8, Unisys 3/4 to 18 7/8 and Apple Computer 1/2 to 44 3/4 in the over-the-counter market.
But brokers said buyers were encouraged by takeover news and rumors, notably in the entertainment industry, that seemed to ease recent fears that Wall Street’s boom in buyouts and mergers might be near an end.
Columbia Pictures Entertainment, which agreed to be acquired by Sony Corp. for $27 a share, rose 1/4 to 26 1/2 in heavy trading.
Paramount Communications, another prominent player in entertainment, climbed 1 1/8 to 57 3/8.
Gainers among blue chips included American Telephone & Telegraph, up 3/8 at 43; General Electric, up 1/2 at 56; Philip Morris, up 3 7/8 at 160 1/2, and Merck, up 2 7/8 at 74.
In Tokyo, stocks retreated for the first time in five trading days. The Nikkei 225-share index closed down 74.25 to 35,370.57.
Shares closed slightly lower in London on continued nervousness about the direction of British interest rates and corporate profitability. The Financial Times-Stock Exchange 100-share index finished down 4.9 at 2,332.0.
Currency
Central banks sold dollars for a third straight day Wednesday, pushing the currency lower after an agreement last weekend that it had risen too much in recent months.
The losses left the dollar 4% lower against the West German mark and Japanese yen than it was late last week, back to its levels of late July and early August.
The central banks squashed a rally attempt at mid-morning in New York. Still, the slight rebound in the dollar signaled to some traders that the official bankers had won the battle against the $300-billion-a-day currency market, but not yet the war.
“Do they want it to get off the mat or do they want to kick it while it’s down? Assuming they’re playing a serious game, I think you’d go for the kidneys now rather than later,” said Charles Taylor, an international economist at Prudential-Bache Securities in Washington.
A strong dollar tends to swell the U.S. trade deficit by making imports cheap and pushing up the price of American goods in foreign markets. At a meeting in Washington, finance leaders of the Group of Seven industrial nations agreed Saturday that the dollar’s rise was “inconsistent with longer-run economic fundamentals.”
Traders said the frequency of sales rather than their size was pushing down the dollar.
The dollar fell against all major currencies except the Canadian dollar, which often moves in tandem with the U.S. dollar, and the British pound, which was weighed down by a worse-than-expected trade deficit report.
In London, the British pound fell to $1.6155 from $1.6215 late Tuesday. In New York, the pound fell to $1.6167 from $1.6190.
In Tokyo, the dollar fell 1.45 Japanese yen to 141.35 yen. Later, in London, it dropped to 139.45 yen. It was quoted at 140.32 yen in late New York trading, down from 142.35 late Tuesday.
Gold edged higher in active European trading. In London, the metal rose to a late bid of $368 an ounce from $367.75 bid late Tuesday. In Zurich, Switzerland, gold also rose to a late bid of $368 from $367.75 bid late Tuesday. Earlier, in Hong Kong, gold rose $2.09 to close at a bid of $369.92.
On the Commodity Exchange in New York, gold bullion for current delivery fell to $367.60 from $368.50. Later, Republic National Bank of New York said gold was bid at $366.20, down from $367.30 late Tuesday.
Silver bullion fell in London to a late bid of $5.28 an ounce, down from $5.31 bid late Tuesday. On New York’s Comex, silver bullion for current delivery fell to $5.245 from $5.263 on Tuesday.
Credit
Bond prices fell slightly in a continued reaction to the dollar’s slide.
The Treasury’s closely watched 30-year bond slipped about 1/8 point, or $1.25 for every $1,000 in face value. Its yield edged up to 8.24% from 8.23% late Tuesday.
Bond investors fear that the value of their Treasury bond portfolio will be damaged if the dollar continues to lose ground against other currencies.
In the secondary market for Treasury bonds, prices of short-term government issues declined 1/8 point, intermediate maturities fell 1/8 point to 3/16 point, and long-term issues lost 1/16 point to 1/8 point, according to Telerate Inc., a financial information service.
Yields on three-month Treasury bills rose to 8.08% as the discount jumped 6 basis points to 7.82%. Yields on six-month bills rose to 8.26% as the discount gained 2 basis points at 7.83%. Yields on one-year bills increased to 8.36% as the discount rose 5 basis points to 7.77%.
The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 9%, unchanged from late Tuesday.
Commodities
Exports demand pushed down grain futures prices on the Chicago Board of Trade. Crude oil futures rose amid OPEC-member opposition to an accord increasing the cartel’s production ceiling.
On other markets, wheat prices were mixed, corn drifted lower, livestock and pork fell, and precious metals declined.
“There’s been very strong export demand for wheat,” said Jerry Zusel, manager of CBOT floor operations for Balfour Maclaine Corp.
Zusel said Egypt late Tuesday tendered for 500,000 metric tons of wheat and the Agriculture Department on Wednesday morning targeted Egypt for 1 million metric tons of export bonus wheat.
Wheat prices were mixed, weakened by a lack of commercial buying while supported by strong export demands, traders said. Corn slipped lower from lack of any major demand.
Prices of crude oil futures moved higher when news reached the New York Mercantile Exchange of OPEC member opposition to an Iranian proposal to increase the oil cartel’s production ceiling for the rest of the year.
Crude oil settled 6 to 24 cents higher, with November at $19.59 a barrel; heating oil was 0.70 to 0.90 cent higher, with October at 58.46 cents a gallon, and unleaded gasoline was 1.64 cents lower to 0.27 cent higher, with October at 58.74 a gallon.
On the Chicago Mercantile Exchange, futures prices for livestock and pork were mostly lower.
Prices for live hogs and frozen pork bellies moved lower as traders, awaiting Friday’s hog inventory report from the Agriculture Department, were concerned over some weakness in the cash markets, said Paul Hare, an analyst in Chicago with Linnco Futures Inc.
Sizable deliveries of cattle to farmer markets weighed on cattle futures, he said.
Futures prices for precious metals were lower on the Commodity Exchange in New York.
Gold settled 50 cents to $1 lower, with the contract for delivery in September at $367.60 an ounce; silver was 1.8 to 2.2 cents lower, with September at $5.245 an ounce.
