STOCKS : Dow Rises 19.82 in Last-Minute Buying Spree
The stock market gained more ground Monday as investors boosted prices in the last minutes of trading after they overcame nervousness about today’s Treasury Department auction of new bonds.
The Dow Jones index of 30 industrials, which rose 16.44 Friday, added 19.82 points to close at 2,622.52 after trading in a tight range all day. It was the third increase in the market’s best-known indicator in the past four sessions.
In the broader market, advancing issues outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 838 up, 646 down and 490 unchanged.
Big Board volume fell to 130.95 million shares from 164.40 million on Friday.
Prices of blue chip stocks moved into the plus column early in the session and held on to tiny gains for most of the day, extending their advance with a spurt in the final hour of trading.
The Treasury will sell about $30 billion of new notes and bonds in a three-day auction starting today. But concern is rising that foreigners, particularly the Japanese and West Germans, may not be as enthusiastic about buying as they have been, largely because higher interest rates in their own countries are making Japan and West Germany government bonds a better buy.
This could impose a glut of U.S. government bonds on the market and depress prices. It also could mean that the Treasury may have to offer higher yields to attract enough demand for the debt securities, which are crucial to finance the federal deficit and keep the government running.
Amax was the most active issue on the NYSE, rising 3/4 to 23 3/4. Among other actively traded stocks, Philip Morris gained 5/8 to 38 7/8, Exxon rose 1/8 to 48 and Bank of New England added 1/2 to 5 3/4.
Bolar Pharmaceutical resumed trading after a 10-day suspension and fell 6 to 10 3/4. The company faces allegations that it sent falsified documents to the Food and Drug Administration about its generic version of Dyazide, a blood-pressure medicine.
Holiday Corp. jumped 3 1/4 to 63 1/2 and boosted other hotel and gaming stocks after it said it had received assurances for financing of a $1.07-billion restructuring. Hilton Hotels added 2 1/4 to 63 1/4, and Golden Nugget climbed 1 3/4 to 24 1/4.
The optimism on financing spilled over to UAL, which rose 5 1/4 to 135 3/4.
General Re rose 3 1/8 to 84 5/8 after it reported higher-than-expected premium volume in its 1989 earnings.
Tokyo stocks, plagued with inertia, barely budged throughout a day of scant trade and closed slightly lower. The key Nikkei 225-share index sagged 18.74 to 37,631.41 after surging 433.75 Friday.
In London, stock prices finished lower after a sleepy session. At the closing, the Financial Times 100-share index was 6.7 points lower at 2,348.4. It was up from its low for the day of 2,344.8 but below its early-morning high of 2,353.7.
CREDIT Pessimism Sinks Price of Bonds Bond prices declined, weakened by anxiety that the upcoming auction to sell new U.S. debt won’t attract many foreign buyers.
Participants said the market also was nervous because of fear that frigid weather may have caused wholesale prices to rise dramatically last month, which could translate into higher inflation and erode the value of bonds. The government is to report the level of January wholesale prices Friday.
The Treasury’s benchmark 30-year bond slipped about 1/4 point, or $2.50 for every $1,000 in face value. Its yield jumped to 8.53% from 8.50% late Friday.
“I think people are being very cautious here in front of the auction,” said William Veronda, a fixed-income economist at Financial Group, an investment company based in Denver.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, unchanged from late Friday.
CURRENCY Dollar Dips; Interest Shifts to the Mark The dollar finished lower against major currencies in quiet trading as the West German mark took center stage in foreign exchange.
Gold prices rose in domestic trading.
On the Commodity Exchange in New York, gold bullion for current delivery settled at $422.40 an ounce, $4.20 higher than Friday’s close. Republic National Bank in New York quoted a late bid for gold at $422.75, up $4.25.
Gabriele Schmitt, a corporate trader for Bank of New York, said the dollar’s decline both here and abroad was “mainly due to the mark’s strength as opposed to the dollar’s weakness.”
She said the mark gained on the belief that Soviet leader Mikhail S. Gorbachev will persuade his nation’s Communist Party to give up its exclusive claim to power, thereby further fueling speculation that East and West Germany could some day be reunited.
“Even if it doesn’t become a reunified Germany right away . . . the belief is that West Germany has the potential to serve this huge market,” Schmitt said. “A lot of people are investing in German corporations.”
COMMODITIES Oil Futures Sag as Mood Turns Bearish Prices of petroleum futures fell sharply on the New York Mercantile Exchange as traders frustrated by resistance in the crude oil market turned their sights to a bevy of bearish signals for gasoline and heating oil.
On other commodity markets, orange juice futures plunged, precious metals advanced, livestock and meat futures were higher, and grains and soybeans were mostly lower.
West Texas Intermediate crude oil futures settled 51 to 63 cents lower, with the contract for delivery in March at $22.39 a barrel; wholesale home heating oil finished 1.34 to 2.31 cents lower, with March at 55.95 cents a gallon, and wholesale unleaded gasoline was 1.65 to 2 cents lower, with March at 62.40 cents a gallon.
Energy futures prices rose last week, largely because of technical strength in the crude oil market despite weak cash markets for petroleum products and growing U.S. inventories of gasoline and heating oil.
