STOCKS : Dow Up 17.82 as Buyers Hunt for Bargains
Stocks closed higher Tuesday, as buyers moved in late in the day to grab blue chip bargains left over after Monday’s big tumble.
The Dow Jones industrial index rose 17.82 points to 2,922.52, recouping a fraction of the 56.44-point fall Monday, when a broad decline saw the Dow down as much as 107 points early in the day.
But most of Tuesday’s Dow gain reflected movements in the oil stocks Chevron, Exxon and Texaco. In the over-the-counter market, meanwhile, the NASDAQ composite index lost 2.08 to 442.56, showing continued selling pressure.
The Dow had seesawed between minor gains and losses all morning until futures-related sell programs pushed it to a double-digit decline in early afternoon. Renewed buying--particularly in the Oil Patch--sparked a recovery.
The broader market showed less movement. In nationwide trading of New York Stock Exchange-listed stocks, 753 rose, 755 fell and 509 were unchanged. Big Board volume shrank to 181.9 million shares from 209 million Monday.
Trading remained volatile as the stock market punished leading corporations that reported earnings pressures.
* Two blue chip companies, Dow Chemical and Morgan Stanley, saw their stocks plummet after they reported second-quarter profit declines. Dow fell 5 3/4 to 52 3/8, while Morgan Stanley dropped 6 to 66 1/2.
* Reuters Holdings, the international news organization, fell 10 to 56 1/4 after saying it expects its earnings growth to slow in the second half.
“One leading stock after another has been taken out and shot,” said Ralph Bloch, analyst at Raymond James & Associates.
“The oils are bolstering stocks today, but we’re not seeing the broad market participate at this point,” added A. C. Moore, director of research at Argus Research.
Other market highlights:
* The oil rally was very strong on news that Iraq had moved troops to Kuwait’s border in a dispute over Iraq’s demand for higher OPEC oil prices. Exxon rose 2 1/8 to 50, Texaco added 2 3/4 to 62 1/2, Chevron rose 1 7/8 to 77 3/4, Unocal gained 7/8 to 31 and Halliburton jumped 2 3/8 to 53 5/8.
* Capital Cities/ABC tumbled 55 1/2 to 533 after the company reported second-quarter earnings below analysts’ estimates and projected a weak third quarter.
* Many growth stocks bounced back from Monday’s selloff. Boeing added 1 to 56 7/8, 3M rose 1 1/4 to 90 1/4, Amgen rose 2 to 87 1/2 and Tokos Medical gained 5/8 to 13 3/4. But tech stocks were mostly weak. Teradata lost 1 1/2 to 23 3/4, Intel fell 1 1/8 to 43 3/8 and Maxtor tumbled 3 5/8 to 10 3/4.
In Tokyo, shares closed down but well off their lows. The 225-share Nikkei average lost 192.33 points to 31,702.46. In London, prices were generally flat. The Financial Times 100-share index rose 1.2 points to close at 2,360.9. In Frankfurt, shares weakened in thin trading. The DAX index fell 16.88 to 1,921.16.
CREDIT: Bond Prices Retreat on Credit Concerns The bond market continued to retreat despite Federal Reserve Chairman Alan Greenspan’s pledge to continue fighting inflation.
The 30-year Treasury bond lost 1/4 point, or $2.50 for each $1,000 in face amount, sending its yield up to 8.57% from 8.55% late Monday.
Greenspan told a House Banking subcommittee that the nation’s central bank was intent on reducing inflation. But he also predicted that a “credible and enforceable” agreement between Congress and the White House to lower the federal budget deficit would lead to a “very significant response” by the Fed to lower interest rates.
Some bond traders are worried that Fed policy might become too loose, allowing inflation to resurge.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8%, up slightly from Monday’s 7.938%.
CURRENCY: Interest Rate Fears Push Dollar Lower The dollar was mixed against key foreign currencies on the belief that U.S. interest rates will decline.
Technical factors, along with news of an Iraqi troop buildup along the Kuwaiti border, helped temper its fall, traders said.
In Tokyo, where the trading day begins, the dollar rose to a closing 148.70 Japanese yen from 148.50 yen Monday. But it fell to 148.35 yen in London and 148.40 yen in New York.
On the Commodity Exchange in New York, gold settled at $367.90 an ounce, off $1.20 from Monday.
COMMODITIES: Oil Futures Gain as OPEC Convenes September contracts for West Texas Intermediate crude oil finished at $20.56 a barrel Tuesday on the New York Mercantile Exchange, up 6 cents from Monday, as OPEC ministers began gathering for a critical strategy session.
A number of ministers expressed support for increasing the cartel’s benchmark price for its crude from the current $18 a barrel, which would require agreement on new production limits.
Iran has proposed a reference price of $20 a barrel while Iraq wants a $25 level. Iraq is threatening Kuwait militarily over alleged production cheating.
