STOCKS : Dow Rises 6.75 After a Day of Ups and Downs
The stock market posted a slight gain Wednesday in lackluster trading dominated by concerns about the U.S. economy and first-quarter corporate profits.
The Dow Jones index of 30 industrials, down about 10 points at its early low, closed 6.75 points higher at 2,743.69.
But declining issues nosed out advances in nationwide trading of New York Stock Exchange-listed stocks, with 724 up, 731 down and 529 unchanged.
Big Board volume came to 142.30 million shares, against 131.61 million in the previous session.
Many investors stood on the sidelines, unconvinced that Tuesday’s big 29-point gain in the Dow index marked the beginning of any solid upward move in the market.
Share prices opened the day mixed, then spent much of the session drifting several points above or below Tuesday’s closing level.
Economic data offered little insight to turn the market one way or the other. The Commerce Department reported that the gross national product grew at a 1.1% annual rate, after adjustment for inflation, in the fourth quarter of last year.
The figure was revised upward from an estimate of 0.9% and came in higher than most analysts’ expectations.
Many observers viewed that as a modest new indication that the pace of business activity seemed to be picking up slowly, reducing the chances of any full-fledged recession.
At the same time, however, traders also appeared to conclude that the odds were shifting in favor of higher interest rates in the months ahead. Rates managed to post small declines in the government securities market Wednesday.
With two trading days left in the first quarter of 1990, the Dow shows a loss of just under 10 points since New Year’s.
Shares of Oracle Systems fell 7 7/8 to close at 17 1/2 after the high-flying software firm disclosed disappointing earnings for its fiscal third quarter. Volume in Oracle shares totaled 20,613,400, setting a single-day record for most active stock traded in the NASDAQ system. The previous record was 18,991,000 shares set by Apple Computer on Jan. 27, 1989.
Prices on the Tokyo Stock Exchange closed sharply lower Wednesday in moderate trading. But today, the key 225-share Nikkei blue chip stock index rose 105.53 points, or 0.34%, to 31,369.10 at midday.
In London, stock prices closed higher in dull trading after an early rally ran out of steam. At the close, the Financial Times 100-stock index was up 8.8 points at 2,275.0.
CREDIT Bonds Up Slightly as U.S. Auctions Notes Bond prices finished slightly higher, buoyed by investors’ favorable response to an auction of government securities.
The Treasury’s closely watched 30-year bond edged up 1/32 point, or about 31 cents for every $1,000 in face value. Its yield was unchanged from late Tuesday at 8.46%.
Analysts said bond prices started the session lower but were later lifted by the auction of four-year Treasury notes.
A total of $8.03 billion in notes was sold out of bids totaling $39.68 billion.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.313%, up from 8.25% late Tuesday.
CURRENCY Dollar Continues Its Assault on the Yen The dollar continued a powerful advance against the beleaguered yen, as investors continued to flee from the ailing Japanese currency, but it fell against all other major currencies in light, trendless trading.
In Tokyo, where trading ends as Europe’s business day begins, the dollar rose for the ninth straight day, closing 1.67 yen higher at 158.63 yen. It also traded at that level in London, and at 158.595 yen in New York, up from 157.635 yen Tuesday.
Dealers said the yen remained under pressure from turmoil in Japanese share prices, which fell 1.77% Wednesday. Also, Japanese interest rates remain relatively low despite the Bank of Japan’s recent one-point rise in its discount rate.
What’s more, the Group of Seven nations have refrained from intervening aggressively on behalf of the yen.
“There is a lack of clear policy and control from the government,” a dealer in Japan said.
“The markets are dictating to the government rather than the government to the markets. They don’t know how to handle global markets.”
The Fed reportedly sold modest amounts of dollars for yen at around 159.10 yen, which helped dampen the dollar’s advance, dealers said. But they said they expected the dollar to hold above 158 yen in the near term, barring further concerted intervention from central banks.
The dollar was weaker against the British pound. Sterling rose to $1.6285 from $1.6255 in London, and to $1.6270 from $1.6260 in New York.
Gold prices were slightly higher following a mixed performance overseas.
On the Commodity Exchange in New York, gold bullion for current delivery settled at $369 an ounce, up 30 cents from late Tuesday. Republic National Bank in New York quoted a late bid for gold at $369.35 an ounce, up 50 cents. Currency dealers attributed the dollar’s decline against the European currencies, in part, to traders trying to cash in on the dollar’s recent gains. But they said the market lacked a clear direction.
COMMODITIES Cocoa Futures Hit Seven-Month Highs Cocoa futures prices rocketed to seven-month highs amid fears that political and economic crises could disrupt exports from the Ivory Coast and Brazil, the world’s two largest cocoa producers.
Uncertainty about Brazil’s changing economic policies also underpinned gains in futures prices of sugar and coffee.
On other commodity markets Wednesday, soybean futures tumbled; copper futures surged; petroleum futures were mixed, and livestock and meat futures advanced.
Cocoa futures settled $39 to $47 higher on New York’s Coffee, Sugar & Cocoa Exchange, with the contract for delivery in May at $1,164 per ton, the highest settlement price of a near-month cocoa contract since Aug. 18.
“It was an explosive move, one of the biggest moves I’ve seen in a long, long time,” said analyst Arthur Stevenson of Prudential-Bache Securities Inc.
Civil unrest in the Ivory Coast, the world’s largest cocoa producer, has kept the market on edge for the past six weeks following the implementation of austerity measures aimed at saving the once-prosperous West African nation from bankruptcy.
Fears of supply disruptions flared again Tuesday on reports of clashes between police and protesters whose illegal demonstrations paralyzed the capital city of Abidjan.
The market was further supported by rumors that the Brazilian government had suspended all commodity exports while it untangles the snarls of red tape created by economic reforms announced nearly two weeks ago.
