FINANCIAL MARKETS : STOCKS : Dow Falls 11.80, but Broader Market Gains
Blue chip stocks fell Friday from a record close in the previous session, but the broader market marched steadily higher.
The Dow Jones index of 30 industrial stocks dropped 11.80 to 2,819.91, cutting its gain for the week to 18.33 points.
In the broader market, advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 742 up, 725 down and 534 unchanged. Big Board volume came to 162.52 million shares, against 164.77 million on Thursday.
Traders said blue chips were pressured by the expiration of key futures and options for the month. Analysts also said investors seemed reluctant to chase after the rally that has carried stock prices sharply higher this month.
Even if interest rates resume their decline from Treasury bond yields of slightly above 9% at their peak a few weeks ago, some brokers question whether stocks will continue to benefit.
They say the same sluggish economic climate that has allowed for a lowering of inflationary expectations and interest rates also has raised new questions about prospects for corporate profits.
Security Pacific was the most active NYSE stock, down 3/4 to 40 7/8 in dividend-related trading.
Cable TV stocks were among the day’s stars: Tele-Communications rose 7/8 to 14 3/4, Cablevision jumped 2 1/4 to 26 3/4 and American TV & Communications rose 2 1/4 to 37 1/8. The stocks have lagged all year.
Software company Microsoft surged 3 1/2 to 68 1/4 on excitement ahead of a new product introduction next Tuesday. But Apple Computer fell 1 3/4 to 39 3/4 after Paine Webber issued a sell recommendation, citing expectations for possible loss of market share in the personal computer market.
Hilton Hotels rose 1/2 to 48 3/4. Salomon Bros. added the company to its recommended list.
In Tokyo, stocks were slightly lower at the close as concern that interest rates may remain high made it hard for the market to escape its four-day doldrums. The Nikkei 225-share index lost 47.88 points to close at 32,013.72.
Share prices fell in active trading on the London Stock Exchange as the market consolidated from Thursday’s impressive rally. The key Financial Times 100-share index finished up 63.3 points, or 2.85%, on Thursday. On Friday, it lost 15.3 points to 2,269.1. In Frankfurt, West Germany, the DAX index added 2 points to 1,843.59.
CREDIT Bond Prices Lose More Ground Bond prices slid further in light dealings as the Federal Reserve took steps that signaled to many traders that it has no intention of relaxing monetary policy soon.
The Treasury’s benchmark 30-year bond fell 1/2 point, or $5 per $1,000 face amount. Its yield, which rises when prices fall, rose to 8.69% from 8.64% late Thursday and 8.66% last Friday.
The market traded in a narrow range this week in the wake of a powerful rally that had knocked long-term Treasury yields down from more than 9% at the beginning of the month.
Analysts said Friday’s decline stemmed from the Federal Reserve’s second consecutive daily move to arrange short-term sales of Treasury securities with the understanding that it would repurchase them in a day or so.
The federal funds rate, the rate banks charge each other on overnight loans, was quoted at 8.188%, unchanged from Thursday.
CURRENCY Dollar Higher in Uneventful Trading The dollar ended mostly higher in light trading, while the spotlight in foreign exchange remained on the strong British pound.
Gold prices rose worldwide.
On the Commodity Exchange in New York, gold bullion for current delivery settled at $374.70 an ounce, up $5.20 from late Thursday. Republic National Bank in New York quoted a late bid for gold at $373.25 an ounce, up $4.15.
With demand for the pound up, foreign traders sold their currencies to buy sterling, and that made the dollar more valuable against those currencies, explained Zlatko Glamuzina, chief dealer at the New York office of Banco di Sicilia.
COMMODITIES Platinum Futures Soar Past $500 Mark Platinum futures prices rocketed above $500 an ounce for the first time in two months amid supply fears sparked by South African racial violence and a reported drop in sales by the Soviet Union.
Meanwhile, cocoa futures surged to new 14-month highs; livestock and meat futures rose; grains and soybeans fell, and oil was mixed.
Platinum futures settled $14.10 to $15.10 higher on the New York Mercantile Exchange, with the contract for delivery in July at $507 an ounce, the highest settlement of a near-month platinum contract since March 15.
The rally was underpinned by the threat of supply disruptions from South Africa.
