FINANCIAL MARKETS : STOCKS : Overall Market Down, but Oil Issues Lift Dow
A late rally in oil company stocks drove blue chip issues into the plus column Thursday, overcoming a spate of disappointing corporate earnings reports.
The Dow Jones index of 30 industrials, down about 20 at its mid-session low, closed with a 12.13 gain at 2,993.81, again putting the index just short of the elusive goal of 3,000.
But the broad market suffered: Declining issues outnumbered advances by about 4-to-3 in nationwide trading of New York Stock Exchange-listed stocks, with 621 up, 858 down and 522 unchanged. Big Board volume totaled 162 million shares, down from Wednesday’s 168.8 million.
Damage was heaviest in over-the-counter issues, where the NASDAQ composite index lost 2.65 to 458.17.
“The oil stocks have led this rally back,” said George Pirrone of Dreyfus Corp.
The oil stocks surge was prompted by rumors that Iraq might use force against Kuwait in their dispute over production quotas. The Organization of Petroleum Exporting Countries meets next week to discuss prices.
Texaco, Chevron and Exxon, all components of the Dow 30 index, gained 1 5/8 to 61 3/8, 1 1/2 to 76 3/4 and 1 1/2 to 50, respectively. Elsewhere, Mobil jumped 2 1/4 to 65 3/4, Arco added 1 3/4 to 125 1/2 and Unocal rose 1 to 30 3/8.
In the broad market, high-tech earnings disappointments hit that sector hard, though bargain hunters entered late in the session.
Apple Computer was off 2 7/8 to 41 3/4 after dropping to a low of 40 on a forecast by Apple’s chairman that it would be difficult for earnings in the quarter ending Sept. 30 to match those of a year ago.
Lotus Development also sank on a weak earnings forecast for the current quarter, losing a substantial 6 1/8 at 25 1/8.
Traders were also cautious after Wednesday’s comments on interest rates by Federal Reserve Board Chairman Alan Greenspan. The Fed chief, in testimony to Congress, said the central bank might lower interest rates further. But that gave some investors reason to question the Fed’s resolve to fight inflation.
Market highlights:
Among high-tech issues that plunged, Tandem Computers dropped 1 7/8 to 19 5/8 after the company reported profit for the fiscal quarter ended June 30 of 30 cents a share, against 31 cents in the 1989 period.
Elsewhere in high tech, Compaq fell 1 to 63 3/8, Teradata dropped 1 1/2 to 26 1/2 and AST Research lost 1 3/4 to 23 3/4. Tandon lost 3/16 to 3 1/8, rallying back from a low of 2-11/16 after its earnings report.
California bank and S&L; stocks were walloped on new fears of real estate losses. HomeFed plunged 4 3/4 to 14 1/4, Ahmanson fell 1 to 20 7/8, CalFed lost 5/8 to 14 1/2, First Interstate sank 2 7/8 to 37 and Security Pacific lost 1 1/8 to 34 3/4.
New stock issue Modtech, the largest builder of modular classrooms in California, went public at 10 and closed at 12.
U.S. Shoe fell 4 1/4 to 18 after saying its second-quarter earnings may be below those of the year-earlier period.
American Ecology of Agoura Hills rocketed 2 to 10 1/4, continuing to surge on Tuesday’s strong earnings report.
In Tokyo, stocks closed mixed. The 225-share Nikkei average closed up 7.51 at 33,055.62.
In London, the Financial Times stock index lost 14.7 to 2,387.3. In Frankfurt the 30-share DAX index drifted 8.80 lower to 1,957.24.
CREDIT
Bond Prices Mixed in Slow Trading
Bond prices finished narrowly mixed in light dealings in the wake of a big slide Wednesday.
Analysts said there was little influential economic news, and prices remained in a narrow range for most of the day as a result.
The Treasury’s benchmark 30-year bond lost 3/32 point, or about $1 per $1,000 in face value, after losing $8 on Wednesday. Its yield rose to 8.55% from 8.54%.
“The market is in a holding pattern,” said Carl Napolitano, a market strategist for R. C. Government Securities.
The Federal Reserve moved late last week to nudge the key federal funds rate down to 8% from 8.25%, and comments from Fed Chairman Alan Greenspan on Wednesday indicated that a further easing is possible. But many traders remain wary of the Fed.
The federal funds rate was quoted at 8%, up from 7.938% late Wednesday.
CURRENCY
Dollar Drifts Down in Dull Session
The dollar ended mostly lower in lackluster trading, with little news to affect the market, traders said.
“There’s no real reason to buy or sell dollars,” said Gabriele Schmitt, analyst at Bank of New York.
The only market activity came from small traders taking profits, she said. “It was one of those choppy days that didn’t have much reason behind it,” she said.
In Tokyo, the dollar rose to a closing 147.60 Japanese yen from 147.25 at Wednesday’s close. Later, in London, it rose to 148.00 yen. In New York, one dollar bought 148.09 yen, up from 147.65 yen.
In London, the British pound fell to $1.8155 from $1.8205 late Wednesday. In New York, one pound cost $1.8165, more expensive than $1.815 late Wednesday.
COMMODITIES
Pork Futures Drop Daily Trading Limit
Prices of frozen pork belly futures plummeted the 2-cents-a-pound permitted daily limit for the second straight day on the Chicago Mercantile Exchange, reflecting bountiful supplies and slack demand for bacon.
On other commodity markets, livestock futures ended mostly lower, energy futures were mixed, grains and soybeans were mixed and precious metals retreated.
Frozen pork bellies settled 2 cents lower across the board, with the contract for delivery in July at 46.50 cents a pound and the more heavily traded August contract at 44.42 cents a pound.
Weak consumer demand for bacon, which is made from pork bellies, has weighed on the market for several weeks. The situation has been reflected in the narrowing gap between prices of fresh bellies on the cash market and frozen ones on the futures market.
Elsewhere, the August contract for West Texas Intermediate oil rose 44 cents to $18.99 a 42-gallon barrel on the New York Mercantile Exchange. Rumors of possible violence between Iraq and Kuwait helped, but prices also got a nudge from technical factors, and from word that the flow of crude through the Alaska pipeline was being reduced.
