STOCKS : Dow Climbs 13.29 Points in Light Trading
Wall Street shrugged off its recent concern about rising interest rates Wednesday and helped stocks to post a healthy gain in light trading.
The Dow Jones index of 30 industrials, down 12.16 points on Tuesday, climbed 13.29 to close at 2,687.84.
Advancing issues outnumbered declines by about 5 to 4 in nationwide trading of New York Stock Exchange-listed stocks, with 828 up, 642 down and 492 unchanged.
Big Board volume totaled 145.06 million shares, against Tuesday’s 145.44 million.
The market retreated Tuesday as interest rates came under new upward pressure in the credit markets. But rates fell back Wednesday, giving some encouragement to stock traders. Most analysts agree that stocks have also benefited lately from hopes that the economy could emerge from its recent period of weakness without having to undergo a full-blown recession.
Brokers say that kind of optimism would be buttressed if interest rates do not go much higher than their current levels.
Gainers among the blue chips included Exxon, up 7/8 at 46 1/2; American Express, up 3/8 at 28 1/4; General Electric, up 1 at 63; Philip Morris, up 1/4 at 37 7/8, and Procter & Gamble, up 1 at 65 1/8.
Procter & Gamble acquired the U.S. marketing rights to Rorer Group’s over-the-counter pharmaceutical products, including the antacid Maalox.
By contrast, Monsanto fell 5 3/8 to 104 1/2. The company projected lower quarterly profits.
West Point-Pepperell jumped 5 1/8 to 46 3/4 before trading was halted on the Big Board late in the session. The company, subject of a takeover plan by investor William Farley, said it reached agreement on a new bridge loan to replace one that was scheduled to mature at the end of this month.
Lotus Development, traded in the over-the-counter market, gained 1 3/4 to 33. The company said it expected its first-quarter results to meet Wall Street’s expectations and was looking for improved profit margins as the year progresses.
In foreign trading, Tokyo stocks closed broadly lower for the third straight day, and traders predicted further falls to come. Some traders also blamed stock index futures-related selling by speculators after the key 225-share Nikkei index dropped 268.44 points to close at 32,352.13.
On London’s stock exchange, share prices ended slightly higher after a slow session. The Financial Times 100-share index rose 1.6 points to end the day at 2,226.1.
CREDIT Bonds Rebound on Rate Optimism In the credit markets, government bond prices rebounded, erasing much of Tuesday’s losses, as traders took a more optimistic view on interest rates and the federal budget.
The Treasury’s bellwether 30-year bond, which tumbled more than 1 point Tuesday, rose 1 point, or $10 per $1,000 in face amount. Its yield fell to 8.60% from 8.71% late Tuesday.
A decline in junk bond prices also boosted Treasury issues. Junk bonds slumped after Columbia Savings & Loan, a Beverly Hills-based thrift, announced that it is selling its portfolio of the risky high-yield issues.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.188%, unchanged from late Tuesday.
CURRENCY Dollar Drifts Down; Gold Prices Slip The dollar drifted mostly lower against other major currencies in light trading, as market participants appeared to be looking for direction.
Gold prices slipped in New York after rising overseas. Republic National Bank of New York quoted a late bid for gold of $398 an ounce, down 70 cents from late Tuesday. On New York’s Commodity Exchange, gold for current delivery also settled at $398 an ounce, down $1.
Traders said there is little domestic economic news to affect currency trading and that concern chiefly centered on speculation about possible Japanese or West German interest-rate hikes.
Thomas J. Palladino, a trader with Amsterdam Rotterdam Bank in New York, said market participants appeared to be unsure about the direction of the dollar.
“Everybody seems to be standing pat, waiting for something to budge them one way or the other,” he said.
He said traders remained concerned about an interest-rate hike by the Bank of Japan, “but it’s been dragged out so long that it’s mostly been discounted.”
COMMODITIES Peru Strike Helps Push Copper Higher Copper futures prices climbed sharply on New York’s Commodity Exchange, reflecting a more optimistic economic outlook and concerns that a strike at Peru’s largest copper company could last longer than a few days.
On other commodity markets, precious metals were mixed; coffee and cocoa futures sagged; soybean futures retreated while grains were mixed; livestock and meat mostly were lower, and energy futures were mixed.
Copper futures soared 3.05 to 6 cents a pound in New York, with the contract for delivery in March up 6 cents at $1.25 and the more actively traded April contract up 5.15 cents at $1.203, the highest copper prices since mid-October.
The rally was launched in early trading by reports that Peru’s labor minister would not mediate negotiations between labor and management in the 3-day-old strike at the Southern Peru Copper Corp. The company produces about two-thirds of the copper in Peru, the world’s eighth-largest producer and second-largest exporter of the metal.
