STOCKS : Early Market Losses Slashed; Dow Dips 6.76
Wall Street suffered a broad loss Monday in light trading but gingerly sidestepped Tokyo’s battered stock market, which recorded its second-biggest point fall ever.
Helped by a late spate of buying that brought blue chips off their lows, the Dow Jones index of 30 industrials ended down a mild 6.76 points at 2,700.45. The Dow had been down about 30 points at the outset.
Most of the drop in New York came in the early moments of the session, after which prices staged a partial recovery.
Declining issues outnumbered advances by more than 5 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 434 up, 1,122 down and 433 unchanged.
Big Board volume totaled 124.36 million shares, down from Friday’s 139.34 million
On the Tokyo Stock Exchange the key 225-share Nikkei index lost 6.6% in a wild free-fall Monday, retreating 1,978.38 points for the day to close at 28,002.07.
In recent weeks the decline has had few ripple effects in U.S. markets. Analysts have ascribed it to predominantly local forces in Japan, including rising interest rates and lofty price-earnings ratios.
Some observers, in fact, have argued that a bad showing in Tokyo might actually serve to prop up the American market by luring money to Wall Street looking for a safe haven.
But lately a good many analysts in this country have confessed to worries that continued erosion in Tokyo might sooner or later undermine confidence in other financial centers as well.
Persistent rumors that a company is buying up Unocal Corp. shares sent the stock up sharply for a third day Monday. Unocal closed up 1 3/4 at 33 5/8 on heavy trading of 1.3-million shares on the New York Stock Exchange, again placing it on the most active list for the day.
Also on Monday, Moody’s Investors Service Inc. upgraded the ratings on about $2.3 billion of long-term debt held by Unocal’s main operating subsidiary, Union Oil Co. of Calif.
Some other oil stocks also were strong, including Arco, up 1 to 116 1/4, and Phillips, up 3/8 to 26 3/8.
Live Entertainment jumped 2 1/2 to 19 1/4 after reporting quarterly earnings. New Line Cinema rose 1/2 to 11 3/8, boosted by the opening of its film, “Teenage Mutant Ninja Turtles.”
Network Equipment Technologies plunged 6 3/8 to 23 1/2 after saying revenue and net income in the quarter just ended will be significantly lower than expected because of delayed orders.
Among actively traded blue chips, General Motors dropped 3/8 to 45 1/2, International Business Machines dipped 1/4 to 105 7/8, American Telephone & Telegraph lost 3/8 to 41 5/8, Philip Morris slipped 1/8 to 39 1/2 and General Electric fell 1/4 to 64.
Share prices finished lower on London’s Stock Exchange, shaken by Tokyo’s plunge earlier in the day and by renewed domestic political concerns. At the London close, the Financial Times 100-share index was 26.3 points, or 1.2%, lower at 2,221.6.
CREDIT Bond Prices Mixed in Cautious Trading Bond prices finished flat to slightly mixed in listless trading, with two reports on the economy pulling the market in opposite directions.
The Treasury’s benchmark 30-year bond fell 1/16 point, or about 62 cents for every $1,000 in face value. Its yield, which rises when prices fall, was virtually unchanged from late Friday at 8.62%.
Bond prices initially were depressed by government figures showing construction spending rose 2.6% last month, said Steven Schaffer, a government bond trader with Manufacturers Hanover Trust Co.
A rise in economic activity usually depresses bond prices because it makes it less likely that the Federal Reserve will act to ease interest rates. Lower rates increase the value of existing bonds.
The Commerce Department also revised its January construction spending figure upward to 2.5%, which was an additional drag on bond prices, Schaffer said. January construction spending was reported last month to have risen 1.8%.
Later, a report by corporate purchasing managers showed the nation’s economy slowed in March for the 11th-consecutive month.
The National Assn. of Purchasing Management, which tracks economic trends by polling its members each month, said its index rose to 48.8% in March from 48.3% in February.
A reading below 50 indicates that the manufacturing economy is generally declining; above 50, that it is generally expanding.
Schaffer said the report helped depress bond prices, but some dealers and analysts found signs in it that the economy was picking up steam.
Traders said the market was more concerned with the value of the dollar slipping slightly Monday from its high of the day and with the report on March unemployment, due Friday, than with the construction and purchasing managers reports.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.313%, up from 8% late Friday.
CURRENCY Profit Taking Fails to Depress Dollar The dollar ended mostly higher against other major foreign currencies despite a wave of profit taking.
Gold prices declined here and abroad. On the Commodity Exchange in New York, gold bullion for current delivery settled at $369.80 an ounce, off 40 cents from late Friday. Republic National Bank in New York quoted a late bid for gold at $370.25, unchanged.
The dollar started out sharply higher on weakness in the Japanese yen, the British pound and the West German mark, dealers said. But they said traders hoping to cash in on its recent rise pushed the dollar off its highs.
“Maybe the dollar has gone up too far, too fast,” said Robert Ryan, a senior trader for Bank of New York.
Another dealer from Europe said: “There are some people that think the move (against the yen) was overdone. Now, there’s talk the Group of Seven will get a rescue package together this weekend for the yen.”
The finance ministers of the United States, West Germany, Japan, France, Britain, Italy and Canada are scheduled to meet in Paris on April 7.
In Tokyo, where trading ends as Europe’s business day begins, the dollar rose 2.30 yen to a closing 159.95 yen. It was quoted at 159.18 yen in London, and at 158.65 yen in New York, up from 158.35 yen Friday. Dollar has opened firm today in Far East trading, at about 159.50 yen. Meanwhile, sterling was hurt by concern about recent violent riots in London over Britain’s new poll tax. In London, the British pound fell to $1.6300 from $1.6465 late Friday. In New York, sterling fell to $1.6390 from $1.6455.
The dollar also rose against the West German mark following reports that the East German central bank won’t accept an exchange rate of one West German mark for two East German marks as part of a reunification plan.
COMMODITIES Pork Futures Rise on Supply Report Most pork futures prices rose their permitted daily limits on the Chicago Mercantile Exchange following a government report that indicated 1990 hog production will continue to lag behind last year’s.
On other commodity markets, cattle futures advanced; soybean futures fell sharply while grains were mixed; oil futures gained, and precious metals retreated slightly.
