Market Loses Steam but Dow Tacks on 0.82
Wall Street stocks eked out a small gain Wednesday in fairly moderate trading, but the market was unable to carry through on Tuesday’s big rally with another strong advance.
The Dow Jones index of 30 industrials, which climbed 41.60 on Tuesday, edged up 0.82 to 2,645.90.
Advancing issues outnumbered declines by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks.
Stock prices in general got a lift Tuesday from news of a takeover bid by Georgia-Pacific for Great Northern Nekoosa.
Analysts said the news was taken as reassurance that merger and acquisition activity wasn’t going to disappear as a result of recent problems involving several debt-financed buyout plans.
Nekoosa shares, after soaring 20 1/8 on Tuesday, slipped back 1 3/8 to 61 1/2 as the most active Big Board issue.
At the same time, analysts said, worries persisted about the numerous disappointments that showed up in corporate earnings for the third quarter of the year.
Those reports prompted talk of a possible significant slowdown in the economy and downward revisions of profit projections for the rest of this year and early 1990.
Big Board volume came to 154.24 million shares, against 176.10 million in the previous session.
In Tokyo, the 225-share Nikkei index ended up a bare 14.99 points at 35,564.43 after climbing 132.00 on Tuesday.
Share prices finished moderately higher in London, bolstered largely by continued gains on Wall Street and technical factors affecting demand for blue chip stocks. The Financial Times 100-share index closed 17.5 points higher at 2,160.1.
Credit
Government bond prices posted modest gains amid additional evidence of sluggish economic growth.
The Treasury’s closely watched 30-year bond rose 5/16 point, or about $3.13 for every $1,000 in face value, as its yield fell to 7.88% from 7.90% late Tuesday.
Prices of corporate issues inched higher, while tax-exempt issues were unchanged.
Gary Schlossberg, senior economist for Wells Fargo Bank in San Francisco, attributed the price gains to a series of economic reports released during the day that indicated economic activity “remains soft.”
The nation’s purchasing managers, for instance, reported that despite a rise in new orders in October, the manufacturing sector remained in decline.
In addition, the Federal Reserve released results of a six-week survey that concluded the economy is growing at a slow to moderate pace.
And in a pair of economic reports, the government said orders for durable and nondurable manufactured goods and construction spending were flat in September.
The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 9.25%, up from 8.875% late Tuesday.
Currency
The dollar ended higher against key currencies in thin trading after falling overseas.
Currency dealers said technical factors within the market were largely responsible for supporting the dollar, although reports of an earthquake in Japan may also have helped the dollar at the expense of the Japanese yen.
In Tokyo, where trading ends before Europe’s business day begins, the dollar rose to 143.08 yen from 142.15 yen at Tuesday’s close. It traded at 143.45 yen in London, and at 143.80 yen in New York, up from 142.87 yen Tuesday.
Trading in Europe was quieter than usual Wednesday, with markets in Italy, Spain, France and Belgium closed for the All Saints Day holiday. In West Germany, only banks in Frankfurt and northern Germany were open.
The dollar was mixed against the British pound. Sterling rose to $1.5815 from $1.5775 in London, but it fell to $1.5755 from $1.5805 in New York.
Gold prices declined. On the Commodity Exchange in New York, gold bullion for current delivery closed at $374.20 an ounce, down 50 cents from late Tuesday. Republic National Bank of New York quoted a late bid for gold of $372.90 an ounce, down 45 cents.
Commodities
Sugar futures prices exploded to 15 1/2-month highs on New York’s Coffee, Sugar & Cocoa Exchange on news that Brazil, the world’s fourth-largest producer, was considering suspending sugar exports.
On other futures markets, coffee futures sank; pork bellies continued to surge; copper advanced; precious metals slipped; oil futures rallied; grains and soybeans rose, and stock index futures advanced.
World sugar futures settled 0.45 to 0.56 cent higher in New York, with the contract for delivery in March at 14.53 cents a pound, the highest settlement of a near-month sugar contract since July 19, 1988.
Coffee futures sank in New York amid fading prospects for a return to export quotas, which were lifted in July, precipitating a sharp drop in coffee prices.
Green, unroasted coffee settled 1.6 to 2.31 cents lower, with December at 72.45 cents a pound.
Pork belly futures soared the permitted limit of 2 cents a pound for the second consecutive day on the Chicago Mercantile Exchange amid expectations for new export demand.
Hog futures rose sharply in line with the bellies while cattle futures were mostly lower.
