STOCKS : Dow Up 7.67 to 2,935.89, a New All-Time High
Blue chip stocks closed at record highs Friday after gaining support from last-minute book squaring related to the “triple-witching” expirations of June stock-index futures and options.
“Expirations trading was set up for selling on the opening and buying on the close,” said S. G. Warburg analyst Ken Ducey.
The Dow Jones index of 30 industrial stocks rose 7.67 points to close at 2,935.89, just barely topping its previous closing peak of 2,935.19 reached on June 4.
For the week, the index posted a gain of 73.51 points.
In the broader market, declining issues outnumbered advances by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 611 up, 835 down and 552 unchanged. Big Board volume came to 205.13 million shares, up from 135.77 million Thursday and the heaviest since 225.41 million on May 14.
“It was a quiet close-out and mainly in the major market index-related stocks,” said Donald Selkin, head of index futures research at Prudential-Bache Securities.
The major market index, which comprises 20 stocks, mimics the Dow index.
A sharp drop in bonds had hurt stocks at the beginning of the session. The bond market was reacting to a modest 0.2% rise in May consumer prices, and more significantly to a pickup in industrial activity in May.
Overall, however, stocks seemed to show little reaction to the economic reports. Some financial stocks fell, continuing the recent downtrend, but elsewhere investors just seemed to pick and choose.
Leading the Dow higher were Chevron, up 1 1/2 to 72; Procter & Gamble, up 1 1/8 to 84 3/8, and GM, up 5/8 to 50 1/4.
McDonnell Douglas lost another 3/4 to 38 5/8 as a Smith Barney analyst repeated his sell suggestion. Northrop fell 1/2 to 18 7/8.
Oil service stocks gained. Baker Hughes added 3/4 to 28 3/4 and Halliburton jumped 1 3/8 to 48.
Among recently battered S&Ls;, HomeFed dropped 1/2 to 23 1/2 and CalFed gave up 3/8 to 19 1/2. But some bank stocks rose, including Wells Fargo, up 1 1/4 to 79 1/2.
Walt Disney Co. climbed 2 3/4 to 131 3/4 amid intense attention on the opening of the film “Dick Tracy.”
Wahlco Environmental of San Diego plunged 2 3/4 to 10 3/8 after saying that several orders for its flue gas-conditioning systems were likely to be delayed, hurting earnings by about 10 cents a share in the current year. The company went public this spring.
Elsewhere, depressed precious-metals stocks staged a modest rally along with the price of gold. ASA Ltd. gained 1 to 44, Homestake Mining rose 5/8 to 16 3/8 and Newmont Gold jumped 1 5/8 to 38 1/4.
In Tokyo, stock prices closed lower in sluggish trading as investors became discouraged by the yen’s sharp fall and retreated to the sidelines. The blue chip Nikkei 225-share index lost 129.71 points to end the week at 32,538.40.
In London, stocks were depressed by a weak start on Wall Street. At the close, the Financial Times 100-share index was down 10.7 points at 2,392.3. In Frankfurt, West Germany, the DAX index ended a quiet trading session just 4.87 points higher at 1,792.26.
CREDIT: Speculation About Rates Sinks Bonds Bond prices tumbled on economic reports that led traders to conclude the Federal Reserve won’t lower interest rates soon.
In its sharpest one-day drop since mid-April, the Treasury’s benchmark 30-year bond tumbled 13/16 point, or $8.13 per $1,000 in face amount.
Its yield, which rises when prices fall, climbed to 8.42% from late Wednesday’s 8.34%, which was the lowest for the long-term bond since late January.
Economists said they were surprised at the sharp drop, which came despite the news on inflation and the U.S. trade deficit that normally would boost bond prices.
They attributed the bulk of the decline to a Fed report that industrial production rebounded an unexpectedly strong 0.6% last month after holding steady in April. The market had expected a 0.3% rise.
Despite intense Bush Administration pressure to lower interest rates, many analysts now believe that the Fed will keep rates level in a continuing battle against inflation.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, same as Wednesday.
CURRENCY: Dollar Mixed in Heavy Trading The dollar lost ground in domestic dealings and finished mixed in Europe in volatile trading.
The dollar initially rallied, both in Europe and the United States, on the notion that the Federal Reserve won’t be inclined to lower interest rates to stimulate production. Lower interest rates make dollar-denominated securities less attractive to investors.
But a bout of profit taking swept European markets, where the dollar closed lower against most currencies, and carried through to U.S. dealings.
Activity was “very heavy and very choppy,” said Stephen Flanagan, a vice president at Manufacturers Hanover Trust.
In Tokyo, the dollar closed at 154.52 yen, up 0.99 yen from Thursday. Later in London, the dollar was quoted lower at 154.10 yen. In New York, the dollar closed at 153.90 yen, down from 154.20.
Gold prices advanced but were unable to recover from Thursday’s $5-an-ounce selloff.
On the Commodity Exchange in New York, gold bullion for current delivery settled at $349.50 an ounce, up $2.70 from late Thursday. Republic National Bank in New York quoted a late bid for gold at $348.50, up $2.65.
COMMODITIES: Orange Juice Prices Take Bad Beating Orange juice futures prices collapsed, reflecting weak demand, a larger government estimate of the Florida crop and unsubstantiated rumors of Brazilian price cuts.
On other commodity markets, pork futures plunged while cattle futures were mixed; energy futures were mixed, and grains and soybeans fell.
Frozen concentrated orange juice futures settled 5 to 10.65 cents lower, with the contract for delivery in July down 10.65 cents at $1.795 a pound.
The selloff followed a Florida Citrus Department report Thursday that U.S. consumption of non-concentrated orange juice was about 15% below a year ago during the four weeks ending April 21.
