FINANCIAL MARKETS : STOCKS : Market Ignores AT&T; Report; Dow Rises 19.8
Stock prices gained Wednesday on buying that was fueled by higher U.S. bond prices, shrugging off unwelcome earnings news from American Telephone & Telegraph.
The Dow Jones index of 30 industrials, which had fallen 59.40 during the past three sessions, climbed 19.80 to 2,862.13.
In the broader market, advancing issues outnumbered declines by about 7-to-5 in nationwide trading of New York Stock Exchange-listed stocks, with 851 up, 597 down and 529 unchanged.
Big Board volume edged up to 146.62 million shares, against Tuesday’s 141.42 million.
AT&T; stock was by far the day’s most active issue, falling 2 1/8 to 39 1/8 on turnover of more than 11.5 million shares.
The selloff came after the company said it expects its earnings for the second quarter to fall short of the 65 cents a share it earned in the April-June period last year.
AT&T; cited weaker-than-expected sales of some of its products, which it attributed to sluggish economic activity and market conditions.
The drop in AT&T;, which is the nation’s most widely held stock with more than 2.6 million shareholders, weighed down the Dow Jones industrial average by close to 4 1/4 points.
But analysts said buyers moved cautiously into some other stocks after it became evident that the AT&T; setback wasn’t starting a general rush to sell.
Recent recession fears also seemed to be abated by the Commerce Department’s report that the index of leading economic indicators rose 0.8% in May.
The increase in the index, which is designed to function as a kind of economic crystal ball, came in toward the high end of advance estimates.
Elsewhere, Caterpillar, which has fallen sharply since early this week on an earnings disappointment, lost another 1/4 to 52 1/4 in active trading.
Pharmaceutical issues were strong, bolstered by bright appraisals from many analysts of the industry’s profit outlook even in a sluggish economy. Eli Lilly gained 1 5/8 to 81, Bristol-Myers Squibb added 1 7/8 to 63 1/4, Abbott Laboratories rose 5/8 to 40 7/8 and Pfizer gained 1 to 63 3/8.
Other gainers among the blue chips included International Business Machines, up 1 1/4 at 118; Exxon, up 1 at 48; Procter & Gamble, up 1 1/2 at 83 3/4, and General Electric, up 1/8 at 69 1/8.
The Tokyo Stock Exchange staged a strong rally, with the leading indicator gaining more than 2% on institutional buying. The Nikkei 225-share index surged 740.98, to close at 32,312.75, a 2.3% gain from Tuesday.
Stock prices finished sharply lower on London’s Stock Exchange, undermined by weakness in the stock index futures market. The Financial Times 100-share index ended down 26.3 at 2373.5.
In Frankfurt, West Germany, stock prices ended firmer as investors returned to buy after Tuesday’s brief consolidation period. The 30-share DAX index rose 11.10 to end at 1,901.46.
CREDIT Demand for 4-Year Notes Lifts Bonds Bond prices finished higher, encouraged by unusually strong demand for the Treasury’s auction of new four-year notes.
The Treasury’s bellwether 30-year bond rose 11/32 point, or nearly $3.44 per $1,000 face amount. Its yield fell to 8.48% from 8.51% late Tuesday.
Kathleen Camilli, economist at Maria Ramirez Capital Consultants Inc., said the market rallied after bidding closed on the Treasury’s auction of $8.3 billion in new four-year notes.
The enthusiasm for the four-year notes spilled over to the rest of the bond market, lifting prices which had drifted in a narrow range for most of the day as traders continued to weigh the import of President Bush’s comments that he would consider tax hikes as part of a broader package of spending cuts and other steps to help control the growing deficit.
Analysts said the market seemed to ignore the government’s leading indicators report.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.313%, unchanged from the level late Tuesday.
CURRENCY Dollar Stronger in Quiet Trading The dollar drifted higher in quiet trading as the markets ignored a report that showed the economy may be strengthening, traders said.
Currency traders said that there was little activity in the market and that the dollar moved in a tight range.
The market paid little attention to the Commerce Department’s report that its index of leading economic indicators rose to a record high in May.
News of increasing economic activity normally is good for the dollar, but “a market that’s bearish on the dollar ignores good news,” said John McCarthy, chief currency dealer for Amsterdam Rotterdam Bank in New York.
President Bush’s comment Tuesday that he may accept a tax increase to reach a budget accord set the tone for the market, McCarthy said. An accord that cuts the federal deficit could lead to lower interest rates, which tend to devalue the dollar relative to other currencies.
In Tokyo, the dollar closed at 154.35 Japanese yen, down from 155.23. In London, the dollar also traded at 154.35. In New York, one dollar bought 154.40 yen, down from 154.55 late Tuesday.
In London, one British pound cost $1.7430, more expensive for buyers than Tuesday’s $1.7360. In New York, the pound traded at $1.7428, cheaper than $1.7430 late Tuesday.
Gold prices firmed. On the New York Commodity Exchange, gold bullion for June delivery closed at $351.40 an ounce, up $1. Later, Republic National Bank in New York quoted an ounce of gold at $350.10, unchanged.
COMMODITIES Sugar Prices Up on Consumption Data Prices of sugar futures bounced sharply higher on New York’s Coffee, Sugar & Cocoa Exchange after the Agriculture Department predicted that world sugar consumption would outstrip production for the sixth straight year.
On other commodity markets, oil futures fell; grains and soybeans were mixed; livestock and meat were mixed, and precious metals were mixed.
Sugar futures settled 0.20 to 0.28 cent higher in New York, with the contract for delivery in July at 12.66 cents a pound.
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