FINANCIAL MARKETS : STOCKS : Market Avoids Selloff, but Dow Still Falls 10.58
The stock market avoided a widely feared selloff Friday after the week’s second overnight blood bath in the Tokyo stock market, but U.S. shares did not escape completely unscathed.
The Dow Jones index of 30 industrial stocks fell 10.58 points to close at 2,564.19, bringing its loss for the week to 71.40, or 2.7%.
In the broader market, declining issues outnumbered advancing ones in nationwide trading of New York Stock Exchange-listed stocks, with 468 up, 987 down and 510 unchanged.
Big Board volume declined to 148.49 million shares, down from Thursday’s 184.32 million.
Japanese shares were routed on Friday when the key Nikkei 225-share index dropped 936 points, or 2.6%, after a 3% plunge on Wednesday.
Drug stocks were among the day’s weakest groups.
Pfizer shares fell again on worries about problems with defects in its heart valve product. The stock lost 3 to 56 1/4, despite Pfizer’s statement that it has adequate insurance for any liability claims over the valves.
Warner-Lambert lost 3 5/8 to 99 3/4 after a medical journal said its treatment for Alzheimer’s disease symptoms, Cognex, was ineffective. The company said it still plans to seek approval for the drug in mid-1990.
Other drug stocks losing ground were Merck, off 1 1/2 to 68, Johnson & Johnson, off 1 to 52 1/8, and American Home Products, down 1 3/8 to 98 1/2.
The stock of Texas Air rose 3/4 to 8 3/8. Its Eastern Airlines unit reached a tentative settlement with unsecured creditors, partly clearing the way for Eastern to emerge from bankruptcy proceedings.
Autodesk slid 2 1/4 to 43 1/2 after the computer software maker’s disappointing fourth-quarter earnings report late Thursday.
Stock prices also ended sharply lower in a gloomy session on London’s Stock Exchange, with investors frightened by the plunge in Tokyo. At the London close, the Financial Times 100-share index was 32.5 points lower at 2,236.7.
CREDIT Prices of Bonds Increase Slightly Bond prices rose a bit, benefiting from a sharp drop in stock trading overseas.
The Treasury’s closely watched 30-year bond was up 3/32 point, or 94 cents for every $1,000 in face value. Its yield fell to 8.55% from 8.56% late Thursday.
Bond traders tracked the stock movements throughout the day looking for signals on whether to buy or sell, said James Capra, senior vice president at Shearson Lehman Government Securities Inc. Trading was light.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, unchanged from late Thursday.
CURRENCY Dollar Up Against Most Currencies The dollar rose against most major currencies but continued to give up its usual place on center stage to the Japanese yen.
Traders said the spotlight was again fixed on the yen, which continued to lose ground as prospects faded for higher Japanese interest rates. Dealers said they are expecting the Bank of Japan to raise the nation’s key discount rate.
“The yen has been center stage,” said Robert Hatcher, a vice president of foreign exchange at the New York office of Barclays Bank PLC. “We’re still waiting for a move on (Japanese) interest rates.”
High interest rates make a country’s fixed-income securities attractive to investors, who need hard currency to make their investments.
The yen continued to slide against the dollar despite interventions by the Bank of Japan to boost the currency, which dealers said occurred twice in the Tokyo market, once later in European trading and once in New York.
Gold prices slipped. On New York’s Commodity Exchange, gold bullion for current delivery settled at $415 an ounce, down from $415.70 on Thursday. Republic National Bank in New York quoted a late bid for gold at $415.50 an ounce, down from $416.20 late Thursday.
COMMODITIES Corn Futures Prices Gain for Third Day Corn futures prices rose for the third consecutive day and analysts said strong demand and relatively tight supplies could keep the market advancing into the spring.
On other commodity markets, wheat futures also rose Friday while soybeans slumped; precious metals retreated; oil futures were mixed, and livestock and meat were mixed.
Corn futures settled 0.75 cent to 1.50 cents higher on the Chicago Board of Trade. The contract for delivery in March was up 0.75 cent at $2.4575 a bushel.
Wheat settled 0.50 cent to 4.50 cents higher in Chicago, with March at $3.94 a bushel; oats were unchanged to 0.75 cent higher, with March at $1.375 a bushel; soybeans were 1.75 to 3 cents lower, with March at $5.6525 a bushel.
Friday’s gain in the corn market was attributed largely to perceptions that the Soviet Union is preparing to buy more U.S. corn. But Soviet demand is just one of the factors contributing to corn’s slow, steady advance from about $2.37 a bushel at the beginning of February.
Analysts cite the Agriculture Department’s Feb. 9 supply-and-demand report, which predicted the amount of U.S. corn in storage on Aug. 31, the end of the current marketing year, at 1.48 billion bushels compared to an estimated 1.93 billion at the end of the 1988-89 year.
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