Financial Markets : STOCKS : Witching Hour Spooks Market; Dow Falls 13.96
A late wave of computerized sell programs linked to expiring options dragged down stock prices Friday.
The Dow Jones industrial index fell 13.96 points to close at 2,635.59. For the week, the blue chip index fell 12.91 points.
The Commerce Department reported early in the morning that the nation’s trade deficit shrank to $7.17 billion in December, its lowest level in five years, but that news was offset by a report that industrial production fell sharply in January.
For most of the day, the stock market was slightly higher, but sell programs overwhelmed the frail advance in the last hour of trading.
Much of the selling was tied to the expiration of stock options and stock-index futures and options in what is known as a “double witching hour.”
On the broader market, advancing shares outpaced declines, 761 to 727, on Big Board volume of 166.8 million shares, compared to 174.6 million Thursday.
Technology stocks slumped Friday, with Hewlett-Packard falling 3 3/8 to 43 7/8 after the firm reported disappointing first-quarter results.
Compaq fell 3 5/8 to 85 1/8 as several analysts cut earnings estimates after Compaq projected sluggish growth in the U.S. market. IBM fell 1/4 to 103 1/2 despite favorable reaction to high-powered workstations introduced Thursday.
Bolar Pharmaceutical tumbled 4 7/8 to 8 1/8 after the Securities and Exchange Commission filed a complaint against the troubled drug company.
Nordstrom dropped 3 1/4 to 29 1/2 on the over-the-counter market after the retailer said it expects earnings to fall in 1990.
Echo Bay Mines fell 2 1/4 to 16 5/8 after it told analysts that a previous estimate of recoverable gold was over-optimistic.
Agency Rent-A-Car jumped 2 1/4 to 12 in response to a published report that some investors believe the company may attract takeover interest.
Castle & Cooke rose 3 1/4 to 35 on the belief that the company’s valuation would be enhanced by a spinoff of its Dole food unit.
BankWorcester gained 2 7/8 to 18 3/8 after it agreed to be acquired by Citizens Financial for $22.50 a share.
Stock prices closed mixed in moderate trading on the Tokyo Stock Exchange Friday, reflecting investors’ worries over Sunday’s general election. The blue chip Nikkei average of 225 selected issues, which soared 316.10 points Thursday, eased 11.67 points to close the week at 37,460.32.
Shares in London finished higher after a quiet session Friday. The Financial Times-Stock Exchange 100-share index closed up 12.1 points, or 0.5%, at 2,325.9.
CREDIT Bonds Steady Ahead of Long Weekend Bond prices finished little changed Friday after a sluggish pre-holiday session and inconclusive evidence on the direction of the economy.
The closely watched 30-year Treasury issue fell 1/16 point, or about 60 cents for every $1,000 in face value. Its yield, which rises when the price declines, inched up to 8.46% from 8.45% late Thursday.
Trading in the government bond markets ended several hours earlier than normal as traders got a head start on the three-day weekend that ends in Monday’s observance of Presidents’ Day.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.1875%, down from 8.375% late Thursday.
CURRENCY Dollar Falls Despite Good Trade Figures The dollar fell Friday despite an encouraging report on the U.S. trade deficit.
Gold prices moved higher, recouping their losses from the previous session. On the New York Commodity Exchange, gold rose $4.70 to close at $417.10 an ounce. Republic National Bank of New York later quoted a bid of $417.25 an ounce, up $4.25.
The dollar opened on a strong note ahead of the government’s merchandise trade report for December.
While the figure was far better than expected, traders focused on the fact that imports were down 5.9%, which they interpreted as an indication that consumer spending is slackening.
In Tokyo, the dollar closed at 144.80 yen, up 0.35 yen from Thursday’s close. In New York, the dollar closed at 143.90 yen, down from 144.85 yen Thursday.
Against the West German mark, the dollar closed in New York at 1.6750 marks, down from 1.6940. The British pound closed in New York at $1.6972, up from Thursday’s $1.6855.
COMMODITIES Copper Futures Up on Supply Outlook Copper futures prices soared Friday on New York’s Commodity Exchange amid positive economic signals and signs of dwindling supplies.
On other commodity markets, precious metals futures advanced; petroleum futures slipped; livestock and meat futures were mixed, and grains and soybeans retreated.
Copper futures settled unchanged to 4.35 cents higher with the contract for spot delivery up 4.35 cents at $1.1285 a pound and the more actively traded March contract up 4.3 cents at $1.1135 a pound.
Traders bid up prices going into the close despite the fact that the market will be closed Monday. Traders usually are cautious heading into a three-day weekend.
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