FINANCIAL MARKETS : STOCKS : Market Edges Slightly Higher; Dow Up 3.20
The stock market closed a trace higher on Thursday, breaking a three-day losing streak after bargain hunters snapped up stocks that had been battered recently.
The Dow Jones index of 30 industrials, down 73.16 points in the five preceding sessions, gained 3.20 to 2,691.13.
Advancing issues outnumbered declines by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 932 up, 627 down and 460 unchanged.
With five trading days left in 1989, the Dow Jones industrial average shows a net gain of 522.56 points, or 24.1%, since the start of the year.
Analysts said evidence of a new move on Wednesday toward easier credit by the Federal Reserve encouraged buyers to nibble warily at stocks that have lately suffered from worries about a possible recession in 1990.
Brokers also said traders remained hopeful that stock prices might benefit from the so-called January effect, a historical tendency for the market--and especially smaller stocks--to show greater-than-usual strength in the first few weeks of a new year.
One explanation often offered for the January effect is the lifting of year-end selling pressures from investing institutions’ cleaning losers out of their portfolios and individual investors realizing losses for tax purposes.
Stride Rite jumped 3 3/8 to 27 7/8. Late Wednesday an investor group proposed a bid for the company at $32 a share.
Among recently depressed stocks, Walt Disney rose 2 1/4 to 114 1/4; Federal National Mortgage gained 1/8 to 34 1/2; General Motors added 7/8 to 42 3/8, and International Business Machines edged up 1/2 to 95 1/8.
Boston Edison dropped 1 1/2 to 20 1/8. The company cut its quarterly dividend to 38 cents from 45.5 cents a share.
Caterpillar, which projected a decline in fourth-quarter earnings from the previous three months, fell 1 7/8 to 57 5/8.
Magnetek lost 1 to 8 5/8 in one of the day’s biggest percentage declines. The company said a jury ruled against its Universal Manufacturing subsidiary in a breach-of-contract case involving L.M.P. Corp.
Big Board volume dipped to 175.15 million shares from Wednesday’s 176.52 million.
In foreign trading, mounting fears that the Bank of Japan will raise its discount rate as soon as today caused investors to yank cash out of the Tokyo Stock Exchange, kicking share prices broadly down. The key 225-share Nikkei plunged 296.52 points to close at 38,215.48.
In London, stocks fell in quiet trading, reflecting a pre-Christmas slowdown throughout Europe.
The Financial Times-Stock 100-share index fell 7.7 points to 2,353.0.
CREDIT Bond Prices Decline in Light Trading Bond prices edged lower in light activity as the Federal Reserve failed to follow up an apparent easing of monetary policy the day before.
The Treasury’s benchmark 30-year bond fell 3/32 point, or about 94 cents per $1,000 face amount. Its yield, which rises when prices fall, increased to 7.85% from 7.84% late Wednesday.
Analysts said action was dull and traders stayed on the sidelines, squaring away portfolios before the end of the year.
The Fed appeared to take no steps following Wednesday’s addition of reserves to the banking system in what was widely perceived as a possible precursor to a move to lower interest rates to help boost a sagging economy.
In the secondary market for Treasury bonds, prices of short-term governments were down 1/32 point, intermediate maturities ranged from 1/16 point lower to 1/32 point higher, and long-term issues ranged from 3/32 point to 5/32 point lower, according to Telerate Inc., the financial information service.
Yields on three-month Treasury bills were unchanged at 7.79% as the discount held at 7.55%. Yields on six-month bills fell to 7.75% as the discount lost one basis point to 7.37%. Yields on one-year bills rose to 7.63% as the discount gained 3 basis point to 7.13%.
The federal funds rate, the amount banks charge each other for overnight loans, held at 8.25%. The rate is seen as a key indicator of Fed policy.
CURRENCY Dollar Dips Against Most Currencies The dollar declined modestly against most major currencies in quiet trading, tipped lower by renewed expectation of lower interest rates.
Gold prices also slipped, despite the continuing fighting in Panama and political turmoil in Romania. Republic National Bank in New York quoted a bid for an ounce of gold at $412.20 as of 4 p.m. EST, down from $413.05 late Wednesday.
Dealers said currency traders also shrugged off the U.S. military intervention in Panama, which was in its second day.
“The market viewed it as a very short-lived situation,” said Stephen Flanagan, a vice president of foreign exchange at Manufacturers Hanover Trust Co. “Interest rates seem to be dominating the market right now.”
In Tokyo, where the business day ends before Europe’s begins, the dollar fell 0.46 Japanese yen to a closing 143.77 yen. Later, in London, it was quoted at 143.68 yen. By the end of trading in New York, the dollar had slipped to 143.65 yen, down from 143.93 yen late Wednesday.
In London, the British pound rose to $1.6125 from $1.6052 late Wednesday. Later, in New York, a pound cost $1.6145, more expensive than $1.6060 late Wednesday.
COMMODITIES Frost Fears Boost Heating Oil Prices Frigid weather forecasts continued to boost orange juice and heating oil futures prices as a record-shattering Canadian cold front moved southward and eastward.
On other commodity markets, precious metals turned lower; livestock and meat futures advanced; and grains and soybeans were mixed.
Prices of most contracts for future deliveries of frozen concentrated orange juice soared the permitted daily limit of 5 cents a pound on the New York Cotton Exchange. The limitless contract for January delivery rose 7.25 cents to $1.417 a pound.
Weather Services Corp., a private forecasting firm in Bedford, Mass., rated the probability of a weekend freeze in the Florida citrus belt at 80% Thursday, up from 75% on Wednesday and 50% the day before.
Peter Leavitt, executive vice president of Weather Services, said the coldest temperatures--projected at 18 to 28 degrees--will likely occur Sunday morning in the citrus country.
The expected freeze would rival one that occurred on Christmas Day in 1983, severely damaging the Florida orange crop, and could well be colder, Leavitt said.
In the populous Northeast, the area most closely watched by heating oil traders at this time of year, the encroaching cold front promised no relief from the subnormal temperatures that are likely to make this December the coldest on record.
“Temperatures in the Northeast have averaged below normal every single day this month,” Leavitt said. “This is the 23rd straight day of below-normal temperatures.”
The cold has forced fuel oil dealers to delve into their reserves to meet the extraordinary demand and, on Thursday, drove heating oil futures prices up sharply on the New York Mercantile Exchange for the fifth straight day and the 16th time in the last 17 trading sessions.
The buying spilled over into the crude oil and gasoline pits, powering futures prices for those commodities up as well.
West Texas Intermediate crude oil settled 31 to 36 cents higher, with February at $21.52 a barrel; heating oil was 0.90 cent to 4.05 cents higher, with January at 79.81 cents a gallon; unleaded gasoline was 1.55 to 2.41 cents higher, with January at 55.63 cents a gallon.
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