Financial Markets : STOCKS : Dow Dips 4.28 Under Pressure of Profit Taking
The stock market started February with a whimper, closing mixed Thursday.
Blue chips fell modestly, pressured by profit taking and continued uncertainty about interest rates. The Dow Jones index of 30 industrials fell 4.28 points to finish at 2,586.26.
In the broader market, advancing issues outnumbered decliners in nationwide trading of New York Stock Exchange-listed stocks, with 881 issues up, 651 down and 435 unchanged.
The market opened higher, taking its cue from the bond market, which advanced in early dealings following Wednesday’s strong gains.
Concerns about interest rates later weakened bond prices, however, and dragged stocks lower. Profit taking also pressured stocks in early dealings, traders said.
With little news to stir investors, the market began drifting in a narrow range and volume dried up as many big institutional investors withdrew to await today’s employment report for January and next week’s $30-billion Treasury refunding, which could provide more information about the prospects for the economy and interest rates.
The consensus among analysts is that the unemployment rate will register around 5.4%.
Big Board volume slipped to 154.58 million shares, down from Wednesday’s 189.66 million.
UAL Corp.’s stock soared 8 3/4 to 129 3/4 on rumors the unions at the company’s United Airlines unit are meeting with bankers, Coniston Partners and other key players to fashion a new bid at $180 a share. An earlier employee-led buyout collapsed in October.
CBS gained 5 3/8 to 185 on continued takeover speculation.
Prices on the Tokyo Stock Exchange closed slightly higher in light trading, encouraged by Wall Street’s recovery Thursday. The Nikkei 225-share index inched up 17.47 points to 37,206.42.
Shares also finished slightly higher on the London Stock Exchange. At the close, the Financial Times 100-share index was up 8.5 points at 2,345.8.
CREDIT Long Bonds Extend Gains; Prices Mixed Bond prices finished narrowly mixed, as long-term maturities extended gains of Wednesday’s session while short-term issues fell.
The Treasury’s benchmark 30-year bond rose 3/16 point, or $1.88 for each $1,000 in face amount. Its yield fell to 8.43% from 8.45% late Wednesday.
Long bond prices had risen almost a full point, or $10 for every $1,000 in face value, on Wednesday.
The bond market got some modest encouragement from the decline in the National Assn. of Purchasing Management’s index to 45.2% from 46.7% in December.
A reading below 50 indicates that the U.S. manufacturing economy is generally declining, while a reading above 50 indicates that the economy is generally expanding. A declining economy helps bond prices because interest rates normally fall in such periods, boosting the value of fixed-income securities in circulation.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, unchanged from late Wednesday.
CURRENCY Dollar Mixed in Narrow Trading The dollar finished mixed as sentiment toward the U.S. currency remained bearish.
Trading was active in Europe, although the dollar held to a narrow range. Dealings lightened considerably when activity shifted to U.S. markets, and the dollar closed near its lows of the day.
Currency traders were also nervously awaiting release of employment figures for January. The figure “is going to be a real key on the market,” said Bob Morrissey, a senior trader at Bank of Boston’s office in New York. “We’re looking for a fairly neutral number, but if there is a jump in unemployment--an indication that the economy is slowing--we could see the dollar much lower.”
COMMODITIES IMF Plan Sparks Sharp Rise in Gold Gold futures prices rose sharply, nearly erasing the previous session’s losses as traders reconsidered the significance of a U.S. proposal that the International Monetary Fund sell some of its gold stockpile.
Silver futures also posted strong gains in trading on New York’s Commodity Exchange.
On other commodity markets, sugar futures rose in volatile trading while energy, livestock and crop futures were mixed.
Gold futures settled $5.40 to $6.20 higher, with the contract for delivery in February up $5.60 at $418 an ounce. Silver futures finished 10 cents to 10.5 cents higher, with February at $5.297 an ounce.
The February gold contract fell $5.70 Wednesday in reaction to a Dow Jones News Service report that the United States had proposed that the IMF sell $4-billion worth of gold to help some Third World countries make past-due loan payments.
The Treasury Department later said the proposal was for the IMF to “mobilize” about $1.2 billion worth of gold. That would not necessarily mean the metal would be sold on the open market but might be swapped for U.S. dollars and other hard currencies in deals with governments and central banks.
The haziness of the proposal and the lack of overt support for the idea among the IMF’s 151 other nation-members were keys to Thursday’s rally, analysts said.
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