Dow Dips 5.94; Trading Frenzy Settles Down
Wall Street stocks returned to calmer territory Wednesday, falling modestly in cautious but steady trading following the market’s wild session on Tuesday.
The Dow Jones index of 30 industrials slipped 5.94 to 2,653.28.
But advancing issues outnumbered declines by about 9 to 8 in nationwide trading of New York Stock Exchange-listed stocks, with 784 up, 700 down and 474 unchanged.
Big Board volume was 155.65 million shares, down from 237.96 million on Tuesday.
The Dow index plunged about 80 points in early trading Tuesday, then rebounded to recoup most of its loss, finishing down 3.69 points.
Traders seemed reluctant to make big commitments in advance of the government’s report today on the gross national product for the third quarter of the year.
The figures are expected to show a continued slowing of economic growth, possibly setting the stage for lower interest rates but also raising questions about the outlook for corporate profits.
The brokerage firm of Smith Barney, Harris Upham & Co. estimates that third-quarter GNP will show an increase at an annual rate of 1.5% to 2%, after adjustment for inflation, down from 2.5% in the April-June quarter.
Du Pont turned in one of the best performances among the Dow industrials, climbing 2 1/2 to 117 3/8. The company reported higher third-quarter earnings, raised its dividend and disclosed plans for a 3-for-1 stock split.
Tokyo stocks eased as investors cashed in some of the profits they made during last week’s advance. The 225-share Nikkei index slipped 84.15 points to close at 35,442.40. Losers outnumbered winners 2 to 1 on heavy volume of 1 billion shares.
Share prices closed modestly higher in London largely on technical factors, although the market was underpinned near the end of the session by Wall Street’s stronger trend. The Financial Times-Stock Exchange 100-share index finished at 2,161.9, up 12.6 points.
Credit
Bond prices ended slightly higher after pulling back from a rally that was stimulated by a successful auction of savings and loan bailout bonds.
The Treasury’s key 30-year issue rose 1/8 point, or about $1.25 per $1,000 in face amount. Its yield, which falls when prices rise, eased to 7.88% from 7.89% late Tuesday.
Traders attributed the midday strength in bonds to the bailout bond auction as well as to congressional testimony by Federal Reserve Board Chairman Alan Greenspan and lingering nervousness about the stock market.
The rally faded late in the day after traders concluded that Greenspan’s comments on inflation and interest rates were nothing new and that the bailout bonds would take some time to be absorbed by the market. Also, stocks finished mixed, giving traders no reason to shift money into bonds.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.688%, unchanged from late Tuesday.
Currency
The dollar ended mostly lower against major foreign currencies in thin, narrow trading following a mixed performance overseas.
Currency dealers said the dollar got an early lift from comments from Fed Chairman Greenspan but edged lower mainly on technical factors. They said many dealers were awaiting today’s release of third-quarter gross national product data, which should shed more light on the direction of the economy and interest rates.
In testimony before Congress, Greenspan hinted that the central bank was unlikely to ease credit by lowering interest rates any time soon because the current inflation rate of 4.4% was too high to be ignored.
Firm rates are seen as bullish for the dollar partly because they make dollar-denominated securities more attractive to foreigners, thereby increasing the need for those investors to convert their money into the U.S. currency.
In Tokyo, where trading ends before Europe’s business day begins, the dollar fell to 141.55 Japanese yen from 142.10 yen Tuesday. It traded at 141.60 yen in London, and at 141.57 yen in New York, up from 141.50 on Tuesday.
The dollar was weaker against the British pound. In London, the pound rose to $1.6090 from $1.6065 late Tuesday. Later, in New York, sterling fetched $1.6143, up from $1.6075.
Other late dollar rates in New York, compared to Tuesday’s quotes, included: 1.8350 West German marks, down from 1.8358; 1.6075 Swiss francs, down from 1.6095; 6.2270 French francs, down from 6.2370; 1.17545 Canadian dollars, up from 1.17135, and 1,345.00 Italian lire, down from 1345.75.
Commodities
A steadier stock market and Japanese buying allowed copper futures prices to end a three-day decline.
On other futures markets, precious metals were slightly lower, while oil products, most grains and livestock were generally higher.
On the Commodity Exchange in New York, the most active copper contract, for delivery in December, moved from its Tuesday low of $1.134 a pound to as high as $1.17 in early trading, but slipped back as the day went on.
Copper settled 35 to 45 cents higher, with the contract for delivery in October at $1.15 a pound.
Also on the Comex, the steadier stock market and stronger dollar sent gold and silver futures slightly lower.
Gold settled $1 to $1.10 lower, with the contract for delivery in October at $369.10 an ounce; and silver was 3.4 to 3.5 cents lower, with October at $5.114 an ounce.
Futures prices for corn and soybeans climbed higher, but wheat prices sagged on the Chicago Board of Trade.
Wheat settled 1.25 to 6.25 cents lower, with the contract for delivery in December at $4.055 a bushel; corn was 1 cent to 2.25 cents higher, with December at $2.4225 a bushel; oats were 0.75 cent to 1.25 cents lower, with December at $1.46 a bushel, and soybeans were 3 to 6 cents higher, with November at $5.66 a bushel.
On the Chicago Mercantile Exchange, livestock and pork prices were mostly higher.
Cattle settled 0.02 cent lower to 0.03 cent higher, with the contract for delivery in December at 75.20 cents a pound; feeder cattle were 0.03 cent lower to 0.30 cent higher, with October at 83.05 cents a pound; live hogs were 0.10 cent lower to 0.27 cent higher, with December at 47.80 cents a pound, and frozen pork bellies were 0.20 to 0.55 cent higher, with February at 53.32 cents a pound.
