STOCKS : Dow Slips a Fraction; Market Mostly Higher
Wall Street stocks managed only a meek follow-through Wednesday to the previous day’s record highs, closing mixed after a day of seesaw trading. Blue chips were slightly lower, but the broader market finished mostly higher.
Traders said Tuesday’s rally left the market ripe for profit takers, and those skeptical of the quality of the rally continued to sit out the session.
The Dow Jones industrial index closed down 0.42 at 2,809.73 after gaining 56.95 Tuesday to close above the 2,800 level for the first time. New York Stock Exchange volume was 192.3 million shares, compared to 162.1 million Tuesday.
In the broader market, which did not rise as sharply Tuesday, 878 stocks moved higher and 725 declined.
A number of traders said institutional buyers were largely absent from the market.
“It looks like they are still trying to sort out what their game plan is for 1990,” said Anthony Woodruff, head trader at Kidder, Peabody & Co.
Nevertheless, analysts were mostly pleased by the day’s performance. “It’s positive that the gains are still kept,” said A. C. Moore, director of research at Argus Research. “It was an opportune time for traders to sell into the gains.”
Shares of several technology stocks, which helped support Tuesday’s rally, continued stronger. International Business Machines Corp. rose 7/8 to 98 7/8, Digital Equipment Corp. added 1 3/4 to 85 7/8, Apple Computer rose 1/4 to 37 1/2, Microsoft was ahead 1/2 to 89 1/4 and Compaq rose 1 3/4 to 84 3/4.
Takeover speculation sent Paramount Communications Inc. stock sharply higher and CBS Inc. shares lower as unconfirmed rumors surfaced that CBS was about to bid for the entertainment and publishing giant.
Paramount stock rose 1 1/2 to 52 3/8 a share in New York Stock Exchange composite trading; CBS tumbled 2 3/4 to 184 a share.
CBS spokeswoman Ann Morfogen denied that her company was about to bid for Paramount, saying, “It’s not true. It’s a rumor.”
Gerber Products fell 5/8 to 46 3/4 after news that its chairman, David Johnson, will depart to head Campbell Soup. Campbell fell 3/4 to 54 1/4.
UAL dropped 7 3/4 to 162 3/4 on the belief that no new buyout deal is imminent, arbitragers said.
In London, shares ended at an all-time high, helped by Wall Street’s record close Tuesday in the Dow Jones industrials. The Financial Times 100-share index rose 29.6 to 2,463.7, passing the previous closing high of 2,443.4 set on July 16, 1987, three months before the Black Monday world stocks crash.
In Tokyo, the markets were closed for the New Year holiday. They were to reopen today.
CREDIT Bond Prices Fall on Home Sales Report Bond prices declined Wednesday as the government reported robust sales of new homes in November, another sign of healthy economic activity.
The Treasury’s benchmark 30-year bond fell 3/8 point, or $3.75 per $1,000 face amount. Its yield climbed to 8.03% from 7.99% late Tuesday.
The Commerce Department said sales of new homes surged 9.6% in November, the steepest gain in four months. Analysts said the report threw water on recent talk of a real estate industry slowdown.
Since long-term fixed-income investments such as bonds are considered a safe haven during periods of economic sluggishness, prices tend to decline after positive economic news.
A sharp rise in crude oil and other commodities prices, which triggered inflation fears, also spurred some bond selling Wednesday, analysts said.
The main piece of evidence expected to move the bond market is Friday’s government report on employment for December, and some economists are forecasting a healthy addition of 220,000 jobs.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.3125%, down from 8.50% late Tuesday.
CURRENCY Dollar Mixed but Firmer Overseas The dollar ended mixed Wednesday against major foreign currencies after firming overseas amid reported efforts by the Bank of Japan to drive it down.
Gold prices slipped in New York and abroad.
On the Commodity Exchange in New York, gold bullion for current delivery settled at $394 an ounce, down $5.60 from Tuesday. Republic National Bank in New York quoted a late bid for gold at $394.35, off $5.40.
Earl I. Johnson, a trader at Harris Trust & Co. in Chicago, said technical factors were largely responsible for the dollar’s movements. But he said trading remained thin as a number of dealers extended their long New Year’s holiday.
In Tokyo, the New Year’s holiday continued with markets closed Wednesday. The dollar was quoted in London at 145.70 yen, compared to Tuesday’s 144.09. In New York, the dollar stood at 145.25 yen, down from 146.40 Tuesday.
The dollar was mixed against the British pound. Sterling dropped to $1.6080 in London from $1.6115 late Tuesday and rose to $1.6115 from $1.6085 in New York.
COMMODITIES Gold Futures Below $400 an Ounce Gold futures prices fell decisively below $400 an ounce in trading marked by an absence of buyers from Far Eastern markets, which were closed for the holidays.
On other commodity markets, sugar, energy and orange juice futures all climbed sharply; livestock and meat futures were mixed, and grains and soybeans advanced.
Gold futures settled $5.60 to $5.80 lower on New York’s Commodity Exchange with the contract for delivery in February down $5.70 at $396.40 an ounce, the lowest close since Nov. 17.
Silver futures ended 2.9 to 3.3 cents lower, with March at $5.22 an ounce.
Sugar futures surged on New York’s Coffee, Sugar & Cocoa Exchange on talk that Mexico had bought a large amount of sugar and that the United States is likely to increase sugar imports as a result of frost damage to sugar cane in Mexico and Florida over the Christmas weekend.
Sugar futures settled 0.50 cent to 1.20 cents higher, with March at 14.22 cents a pound.
Energy futures continued to soar on supply concerns before the American Petroleum Institute’s weekly inventory report. The report, released after the close, showed larger-than-expected declines in U.S. stocks of unleaded gasoline and petroleum distillates, including heating oil. Crude oil stocks were down slightly and near expectations.
West Texas Intermediate crude oil finished 11 to 79 cents higher, with February at $23.68 a barrel; heating oil was 0.81 cent to 1.47 cents higher, with February at 78.20 cents a gallon, and unleaded gasoline was 1.50 to 1.76 cents higher, with February at 67.23 cents a gallon.
Orange juice futures soared for the sixth straight day on the New York Cotton Exchange amid supply fears linked to the Christmastime freeze in the Florida citrus belt and the continuing suspension of orange juice exports from Brazil, which halted shipments last week while it assesses the damage in Florida.
Orange juice futures finished 1.8 to 8 cents higher, with January at $1.7205 a pound.
