FINANCIAL MARKETS : STOCKS : Dow Dips 4.05 to 2,717.12 in Light Trading
The stock market closed lower in light trading Friday under pressure from a turbulent bond market, a weak economy and widespread losses in the thrift industry.
The Dow Jones index of 30 industrial stocks ended down 4.05 points at 2,717.12.
Declining issues outnumbered advances by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 622 up, 860 down and 516 unchanged.
Big Board volume came to 137.49 million shares, down from 144.17 million in the previous session.
Many investors have stood on the sidelines for the past few weeks, accounting for the market’s low volume and narrow trading range. The Dow ended the week up a mild 9.91 points.
“There are so many things that are unresolved, it’s very hard to make any clear investment decision,” said Joseph Barthel of Hopper Soliday & Co.
Although the overall unemployment rate dipped to 5.1% after nine straight months at 5.2%, the pace of new job growth eased dramatically and caught the eye of economists, who began worrying about weakness ahead.
Stocks traded in positive territory after the report was released, supported by the belief that an economic slowdown could mean lower interest rates ahead.
“The market is susceptible to short-term swings in psychology,” said Bradley Turner, investment strategist at McDonald & Co.
The General Accounting Office unwittingly fed the market bears when it reported that the savings and loan bailout would likely cost $325 billion and might even spiral up to $500 billion--much higher than any previous estimates.
“Banks, savings and loans and the bond market haven’t given any support” to the stock market, said Ed Laux, a senior vice president at Kidder, Peabody & Co.
Traders were nervous about the weekend meeting of the Group of Seven major industrialized nations, where talks will likely focus on bringing the dollar down.
Banks and other financial issues were hammered for the second straight day. Bank of New York dropped 1 1/4 to 30, BankAmerica fell 7/8 to 25 1/2, J. P. Morgan dipped 3/8 to 34 5/8, Federal National Mortgage lost 2 5/8 to 32 and Federal Home Loan Mortgage fell 3 1/2 to 65 1/4.
Losers among the blue chips included Aluminum Co. of America, down 1 3/8 at 62; Hewlett-Packard, down 1 1/8 at 43 3/4; USX, down 1/2 at 35 7/8; American Telephone & Telegraph, down 1/8 at 41 5/8, and International Business Machines, down 1/4 at 105 7/8.
Tandem Computers was actively traded, unchanged at 22 5/8. The stock tumbled 4 3/4 points Thursday, when the company said revenues for the fiscal quarter that ended last weekend fell short of its target.
Software firm Legent Corp. plunged 5 1/2 to 20 3/4 after saying it expects quarterly earnings to fall below expectations. The news help drag other high tech stocks lower.
In foreign trading, a growing belief that Tokyo stocks have hit bottom after their recent steep declines sparked a buying spree, with the market posting its fourth-biggest point gain ever. The 225-share Nikkei index surged 1,029.72 points, or 3.65%, to close at the day’s high of 29,278.78.
Prices fell sharply on London’s Stock Exchange on nervousness before this weekend’s Group of Seven meeting in Paris. Traders also said concern about British Prime Minister Margaret Thatcher’s unpopularity upset the market. At the close, the Financial Times 100-share index was down 18.4 points at 2,221.1.
CREDIT Bond Prices Stable After Hectic Trading Bond prices finished unchanged to slightly higher after a volatile session racked by the worse-than-expected employment figures for March and concern over German currency-swap plans.
The Treasury’s benchmark 30-year bond closed unchanged from late Thursday at 99.25 while its yield remained at 8.51%.
Bond prices shot up after the government reported that the growth in non-farm jobs last month was 26,000--far lower than estimates of about 175,000. The figures implied that “the economy really isn’t doing as well as we thought,” said Mike Geraty, a bond trader with Clayton Brown & Associates in Chicago.
Signs of economic weakness usually boost bond prices since they imply the Federal Reserve may act to ease interest rates. Lower rates boost the value of existing bonds.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.188%, down from 8.25% late Thursday.
CURRENCY Dollar Heads Down as G-7 Talks Near The dollar ended the week slightly lower in subdued dealings Friday as traders moved to the sidelines ahead of a weekend meeting of the Group of Seven.
Gold prices were sharply higher in the United States after posting modest gains overseas. On the Commodity Exchange in New York, gold bullion for current delivery settled at $380.70 an ounce, up $5.90 from late Thursday. Republic National Bank of New York quoted a late bid for gold of $380.50, up $5.50.
Currency trading was uneventful. Dealers were reluctant to do much ahead of the Group of Seven finance ministers’ meeting in Paris over the weekend.
In Tokyo, the dollar fell to 157.47 Japanese yen from 157.90 yen at Thursday’s close. Later in London, it slipped further to 157.45 yen. In New York, however, the dollar rose to 157.70 yen from 157.50 yen on Thursday.
Other late dollar rates in New York, compared to late Thursday’s rates, included: 1.6942 West German marks, down from 1.6997; 1.5005 Swiss francs, down from 1.5015; 5.6985 French francs, down from 5.7150; 1,245.25 Italian lire, down from 1,249.50, and 1.1648 Canadian dollars, down from 1.1683.
COMMODITIES Copper Prices Climb on Strike Concerns Copper futures rallied sharply on New York’s Commodity Exchange on concerns over the continued strike at mines in Peru and declining supplies, but profit taking trimmed prices near the close of trading.
On other markets, precious metals were higher, grain and soybeans declined, livestock surged and pork prices declined, and oil prices were mixed.
Copper settled 1.60 to 2.55 cents higher, with the contract for delivery in April at $1.245 a pound.
Copper prices surged 420 points in early trading on the Comex before gains were trimmed by half to settle 255 to 160 points higher.
Analyst Jim Steel of Refco Inc. in New York said the rally stemmed from short covering--the buying of contracts to fulfill obligations made by selling borrowed contracts earlier--by traders following Thursday’s selloff.
