STOCKS : Dow Off 17.34; Tokyo Rumor Sinks Market
Wall Street stocks, losing some of their immunity to Tokyo’s recent market debacle, fell Wednesday on a rumor that a Japanese financial firm was facing a cash crunch.
The Dow Jones index of 30 industrials, up 36.26 points on Tuesday, dropped back 17.34 to 2,719.37.
In the broader market, declining issues outnumbered advances on the New York Stock Exchange, with 596 up, 918 down and 471 unchanged.
Big Board volume rose to 159.54 million shares from Tuesday’s 154.31 million.
The U.S. stock market has largely succeeded in sidestepping Tokyo’s carnage, but rumors of impending financial troubles at an unidentified Japanese brokerage firm provided an excuse to take profits.
The rumors appeared overnight in the Tokyo stock market and they picked up speed in New York in the afternoon, despite lack of confirmation or detail.
“There is no question that there was a rumor of a Japanese firm having problems and that it had an effect,” said Gruntal & Co. market analyst Alan Ackerman.
Pinkerton Inc., the Van Nuys-based security guard company, went public at $14 a share and closed at that price. The offering price was at the bottom of the $14 to $16 range the company had wanted.
Trading in Southland Communications of Santa Ana was suspended for 10 days by the Securities and Exchange Commission, pending an investigation. The SEC cited questions concerning a possible undisclosed stake in the paging company by outside investors. Southland’s last trade was at 16 7/8.
Prices on the London Stock Exchange closed lower after a mediocre early showing on Wall Street. At the close, the broad-based Financial Times 100-share index was down 9.1 points at 2,231.6.
CREDIT Bond Prices Stage Healthy Comeback Bond prices rallied, fueled by unconfirmed speculation that the Japanese financial markets may be headed for a shock.
The Treasury’s benchmark 30-year bond, up marginally at midday, climbed in the afternoon to finish with a gain of 1 5/32 points, or about $11.50 for every $1,000 in face amount.
The widely watched issue’s yield, which falls when prices rise, dropped to 8.50% from 8.61% late Tuesday.
Analysts said Treasury bonds got a lift late in the day as the rumors circulated among bond traders that a Japanese investment firm may not be able to meet a margin call, a development that could send the Japanese stock market sharply lower.
The rumors prompted buying of Treasury issues, which are often viewed as relatively safe investments in times of economic trouble.
“There were rumors, rumors and more rumors,” said Robert Brusca, chief economist for Nikko Securities International in New York.
Brusca said prices of the American Depositary Receipts of some Japanese companies that are traded on U.S. stock markets also fell.
But he said such movements “are often not a good bellwether of what Tokyo will do.”
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, down from 8.313% late Tuesday.
COMMODITIES Copper Futures Drop Sharply Copper futures prices fell sharply on New York’s Commodity Exchange amid selling prompted partly by settlement of a 24-day strike against the Southern Peru Copper Corp.
On other commodity markets, silver led precious metal futures higher; coffee futures surged; petroleum futures sank; grains and soybean advanced, and livestock and meat futures were mixed.
Copper futures settled 2.95 to 4.7 cents lower, with the contract for delivery in April at $1.235 a pound.
CURRENCY Dollar Mixed in Cautious Trading The dollar ended narrowly mixed against major foreign currencies as dealers marked time before the release of government unemployment data and an upcoming meeting of industrial nations.
Gold prices rose following a mixed performance overseas. On the Commodity Exchange in New York, gold bullion for current delivery settled at $377.10 an ounce, up $1.80 from late Tuesday. Republic National Bank in New York quoted a late bid for gold at $377.75, up $2.50.
In Tokyo, where the trading day begins, the dollar closed at 158.90 yen, down 0.05 yen from Tuesday. The dollar traded at 158.49 yen in London. In New York, it finished at 158.875 yen, down from 159.765 yen on Tuesday.
