STOCKS : 30-Point Gain Breaks Dow’s Slump
The stock market snapped out of last week’s slump Monday with a rally led by blue chips.
But trading set its slowest pace in more than two months.
The Dow Jones index of 30 industrials, down 38.59 points last week, rebounded 30.19 to 2,892.57.
Advancing issues outnumbered declines by about 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 918 up, 563 down and 516 unchanged. But Big Board volume totaled just 119.55 million shares, down from Friday’s 142.60 million.
Analysts said traders were doing selective bargain hunting in blue chips while awaiting a broad array of economic reports due this week. Among the monthly statistics on the agenda are the producer price index of finished goods, due on Thursday, and the consumer price index and the nation’s trade balance, both on Friday.
If all goes as expected, brokers say, the data will support the popular view that economic growth is plodding along at a pace slow enough to permit inflation and interest rates to ease.
However, they add, any surprises in the numbers could unsettle some of the optimism generated during the rally that recently carried stocks to new highs.
Much of the Dow’s strength came from Boeing, up 3 1/2 to 58 1/2 on turnover of more than 2.3 million shares. The stock, which was split 3-for-2 with Monday’s trading, responded to word of a $4.8-billion order from Korean Air Lines for 747-400 jets.
Energy stocks attracted buyers after dropping last week with falling oil prices. Exxon gained 7/8 to 47 7/8, Chevron added 1 1/8 to 70 5/8 and Arco rose 2 to 116 7/8.
Technology stocks were strong. Western Digital jumped 3/4 to 14 1/2, Intel rose 1 to 47 1/2, Sun Microsystems added 1 to 31 5/8 and Amdahl rose 5/8 to 15 3/4. But Microcom tumbled 8 1/2 to 9 3/4 after projecting a loss for the current quarter, saying major domestic distributors were overstocked with its software and modem products.
Some retailers rebounded from last week’s slide. Gap added 1 7/8 to 58, Dayton Hudson jumped 1 1/4 to 73 3/8 and K mart rose 1/2 to 36 7/8.
Among Southland stocks up sharply, HomeFed gained 1 1/4 to 33 5/8, Teledyne rose 1 1/8 to 28, Syncor jumped 5/8 to 9 1/8, Standard Pacific rose 5/8 to 13 1/4 and American Ecology soared 1 1/8 to 5 1/8.
In Tokyo, stocks closed sharply lower as a weaker yen undercut the benchmark Nikkei average’s 10-week climb from lows in April. The Nikkei tumbled 453.11, or 1.37%, to 32,540.18.
Share prices closed lower on the London Stock Exchange, despite a surge on Wall Street. The Financial Times 100-share index ended 17.8 points lower at 2,348.8. In Frankfurt, stocks closed above their lows in very thin trading. The DAX index ended off 12.51 points at 1,809.66.
CREDIT: Bond Prices Slip in Light Trading Bond prices drifted slightly lower in very light volume as traders awaited government reports later this week that they hope will provide more direction for the market.
The Treasury’s benchmark 30-year bond fell 1/16 point, or 63 cents per $1,000 face amount. Its yield was 8.44%, virtually unchanged from late Friday. The prices of most shorter-term maturities were off slightly as well.
“There was really no driving factor. It was very slow,” said Raymond Stone, an analyst with Stone & McCarthy Associates of Princeton, N.J.
He said the market seemed to ignore a call by Federal Reserve governor Martha R. Seger that the central bank relax its monetary policy by the end of the year. Speaking Sunday at a meeting in Switzerland, she warned that keeping the money supply too tight could spark a recession.
But her comment apparently did not excite the market because hers is a minority view, Stone said. Other Fed officials said just last week that the economy is faring well enough to keep interest rates where they are.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.188%, unchanged from Friday.
CURRENCY: Dollar Declines Except Against Yen A lack of fresh economic news led to a slow day for currency traders Monday as the dollar was lower against most major currencies except the Japanese yen. Gold prices were mixed.
“It’s been very quiet today, all day long,” said Lorenzo Troni, vice president for foreign exchange at Paine Webber International in New York. “I think everyone is waiting for some economic data.”
In Tokyo, the dollar rose 1.45 yen to a closing 154.10 yen. Later, in London, it was quoted at 154.45 yen. In New York, it climbed to 154.77 yen from 153.49 late Friday.
One trader, Linda McLaughlin of Chemical Bank, attributed the dollar’s strength against the yen to money from individual investors in Japan who have just received semiannual bonuses. The workers are apparently looking to invest in U.S. markets, she said.
In London, the British pound was quoted at $1.6858, stronger than $1.6843 late Friday. The pound traded at $1.6860 late Monday in New York, more expensive than $1.6840 late Friday.
COMMODITIES: Corn, Soybeans Rise; Cocoa Futures Dive Corn and soybean futures posted strong gains on the Chicago Board of Trade after a slow opening. Analysts attributed the rebound largely to technical buying.
Wheat futures also advanced while oats finished lower.
On other commodity markets, energy futures were mixed; pork bellies surged; leading livestock and meat futures were higher; cocoa futures plummeted and precious metals rose.
Corn futures settled 3 to 5.25 cents higher, with the contract for delivery in July at $2.8975 a bushel; soybeans were 6 to 10.50 cents higher, with July at $6.08.25 a bushel; wheat futures settled 1.25 to 4.50 cents higher, with July at $3.3275 a bushel; oats were 1 cent lower across the board, with July at $1.4725 a bushel.
Analysts said many of the large speculators who sold soybean contracts Friday returned Monday as buyers, helping to lift soybean prices to their highest levels in two weeks.
The corn market extended a strong upward trend supported by last month’s rain, which delayed planting, and by perceptions that corn supplies are unusually tight.
