FINANCIAL MARKETS : Market Mixed on Jittery Day; Dow Gains 7.25
Stock prices were widely mixed Thursday in a volatile session marked by uneasiness over weak corporate earnings and rising interest rates.
The Dow Jones index of 30 industrials, down nearly 20 points at mid-session, closed with a gain of 7.25 points at 2,666.38.
Some analysts said the late rise represented a bounce back from an oversold condition.
Declining issues outnumbered advances, however, by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 584 up, 899 down and 495 unchanged.
Analysts said blue chips benefited late in the day from computer-driven program trading. But they described the overall news background as bleak.
Rising rates in Japan, Germany and Britain are seen as a deterrent to any move soon by the Federal Reserve Board to relax its credit policy.
Fed policy-makers are believed to be concerned that lower rates in the United States would prompt a flow of money out of American credit markets and into foreign securities with increasingly attractive yields.
That perception has helped push U.S. interest rates higher in the past several days.
USAir fell 2 to 28 3/4. The company described its operating results for the fourth quarter as extremely disappointing and said it expected to post a loss for all of 1989.
Gainers in the blue chip sector included Philip Morris, up 7/8 at 39 3/8; General Electric, up 5/8 at 63 5/8; Procter & Gamble, up 1 at 69 1/2, and DuPont, up 7/8 at 122 1/2.
Big Board volume rose to 178.59 million shares from 170.47 million on Wednesday.
Tokyo share prices closed broadly lower after another day of volatile trading in which prices fluctuated in a range of almost 500 points. The key 225-share Nikkei index fell 91.68 points to 36,729.46.
In London, stock prices finished a volatile session sharply lower as nervousness over the outlook for global markets continued to undermine trading. The Financial Times 100-share index ended the session down 37.0 points, or 1.6%, at 2,336.9.
CREDIT Bonds Dive on New Fears of Inflation Bond prices tumbled in reaction to increased worries about inflation, dimmed prospects for lower interest rates and a growing belief that the economy has hit bottom.
The Treasury’s benchmark 30-year bond sank 29/32 point, or $9.06 per $1,000 face amount. Its yield, which rises when prices fall, rose to 8.33% from 8.25% late Wednesday.
The yield was the highest on the long bond since it hit 8.34% last June 7.
“It’s basically been a continuation of this bad mood the market’s been in,” said Elliott Platt, research director for Donaldson, Lufkin & Jenrette Securities Corp.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.125%, down from 8.188% late Wednesday.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds closed at 92 1/4, down 7/16 point. The average yield to maturity rose to 7.36% from 7.32% late Wednesday.
CURRENCY Dollar Posts Sharp Gain on Rate Unease The dollar rose sharply against key foreign currencies in active trading as the market appeared more confident that the Fed will not cut interest rates soon.
Gold prices declined after gaining overseas.
On the Commodity Exchange in New York, gold bullion for current delivery closed at $410.20 an ounce, down $2.30 from Wednesday. Republic National Bank in New York quoted a late bid for gold at $410.88 an ounce, off $2.10.
Currency dealers said the dollar was bolstered by a report in Thursday’s Wall Street Journal quoting two Fed officials as saying they wouldn’t support a cut in short-term interest rates unless economic conditions changed.
Firm interest rates tend to support the dollar.
Both the officials, Manuel Johnson, a Fed vice chairman, and Wayne Angell, a Fed governor, had led a move toward lower interest rates in recent months.
Some dealers said the Fed had tried to thwart the dollar’s rise Thursday by selling dollars for yen, but the market ignored that intervention.
Also boosting dollar-buying interest Thursday was the continued unrest in the Soviet Caucasus. The dollar is often seen as a safe haven in times of political turmoil.
In Tokyo, where trading ends before Europe’s business day begins, the dollar closed at 145.66 Japanese yen, up from late Wednesday’s 145.52. The dollar traded at 146.05 yen in London, and at 146.35 yen in New York, up from 145.395 yen.
One British pound cost $1.6445 in London, down from Wednesday’s $1.6525, and $1.6435 in New York, down from $1.65235. The German mark was quoted late in New York at 1.7150, up from 1.687 late Wednesday.
COMMODITIES Wheat Prices Fall as Storm Hits Plains Wheat futures prices dropped and cattle futures rose as an intense winter storm system muscled into the Southern Plains, bringing badly needed moisture to the winter wheat crop and slowing livestock marketings.
On other commodity markets Thursday, orange juice futures fell sharply, most energy futures rose and precious metals retreated.
Meteorologist Harvey Freese of Freese-Notis Weather Inc. in Des Moines, Iowa, said the winter storm was likely to bring the largest snowfall in two years to the Texas and Oklahoma panhandles.
Snow and rain were expected to spread over a wide area, including western Kansas and western Nebraska, before the system pushes north and east into the Midwest.
The heavy downfall will help relieve the unusually dry conditions that have prevailed in winter wheat country since late autumn.
Wheat futures settled 1.5 to 3.25 cents lower on the Chicago Board of Trade, with the contract for delivery in March at $3.9775 a bushel.
Corn futures finished 0.50 cent to 1.75 cents higher, with March at $2.42 a bushel; oats were 0.50 cent to 1.50 cents lower, with March at $1.3825 a bushel; soybeans were 1.75 to 3.50 cents higher, with January at $5.6075 a bushel.
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