STOCKS : Dow Gains 0.99 as Mideast King Heads to U.S.
Stock prices inched higher Tuesday in moderate trading, erasing earlier losses on favorable news from the Middle East and a drop in oil prices.
The Dow Jones index of 30 industrial stocks closed a scant 0.99-point higher at 2,747.77. Early in the day it was down by as much as 16 points.
But advancing issues outnumbered declining ones by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 852 up, 640 down and 496 unchanged.
Big Board volume came to 130.32 million shares, up from 122.82 million in Monday’s session, which was curtailed by a power outage in New York’s financial district.
Jon Groveman, head of equity trading at Ladenburg, Thalmann & Co., said the market rallied on the news that Jordan’s King Hussein was on his way to the United States to confer with President Bush over the Iraqi situation.
“We’ve been inundated with negative headlines. With the market oversold like this, people are looking for an excuse to buy,” Groveman said.
An additional boost came from a rise in bond prices and a drop in oil prices, also credited to King Hussein’s trip and the lack of any fresh bad news from the Middle East.
In addition, stock prices were boosted by a late round of computer-driven buying linked to stock-index futures, traders said. The buying sent prices to their peak, with the Dow more than 18 points higher on the day at one point.
Analysts said the market appeared to ignore a report that gave mixed signals on the economy. The Commerce Department said July retail sales rose 0.1%, short of expectations. But the department revised upward the sales figure for June to a 1.1% increase from 0.5%.
Market highlights:
* Some industrial stocks, devastated recently, found buyers. GM rose 5/8 to 40, Alcoa gained 1/2 to 64 3/8 and Caterpillar added 3/4 to 47 3/8.
* Biotech stocks jumped again on word of possible streamlining of drug approvals. Amgen rose 1 to 48, Immunex jumped 1 1/2 to 28 and Genzyme leaped 1 1/4 to 19 1/4.
* Oil stocks were mixed. Arco lost 2 1/8 to 135 1/8, and Chevron slipped 1/4 to 77 7/8, but Unocal rose 1/2 to 33 1/8, and Halliburton added 7/8 to 56 7/8.
* Airline stocks tumbled on fears of new fare wars. AMR lost 2 1/8 to 49, Delta fell 1 7/8 to 57 1/2 and UAL dropped 4 3/8 to 105 3/4.
* Software firm Ashton Tate rose 1/4 to 8 3/4. The firm said it may buy back up to 2 million of its 27 million shares.
* Litton Industries lost 3/4 to 72 7/8. Moody’s downgraded the defense contractor’s debt.
Stock trading was reported to be near normal following Monday’s curtailed session due to the blackout. The American Stock Exchange, which was forced to halt trading shortly after 1 p.m. EDT Monday, opened for business at the regular time.
The NYSE was unaffected by the outage, which was caused by a fire in a utility company substation.
In Tokyo, the key 225-Nikkei index ended this morning’s session up 839.47 points, or 3.15%, to close at 27,512.00 after gaining 496.10 points Tuesday.
In London, shares ended higher in quiet trading as many investors kept to the sidelines, awaiting further news from the Persian Gulf. The Financial Times-Stock Exchange 100 index was up 14.5 points at 2,234.0.
In Frankfurt, West Germany, shares stabilized as investors remained wary of trading during the Gulf crisis. The 30-share DAX index ended 9 points higher at 1,715.05.
CREDIT Bond Prices Rally in Late Turnaround Bond prices climbed in an afternoon rally as falling gold prices and hopes for increased crude oil production eased inflation fears.
The Treasury’s benchmark 30-year bond climbed 1/4 point, or $2.50 per $1,000 face amount, while its yield fell to 8.77% from 8.81% late Monday.
The credit markets had slumped in morning trading as oil and gold prices continued upward, increasing fears of inflation, which erodes the value of fixed-income securities such as bonds. But prices backed off later in the day.
News that Jordan’s King Hussein is traveling to the United States to meet with President Bush about the Iraq conflict and deliver a letter from Iraqi President Saddam Hussein also helped ease concerns about the crisis.
The federal funds rate, the rate banks charge each other on overnight loans, was quoted at 8.063%, down from 8.125% Monday.
CURRENCY Dollar Skids With Economic Outlook The U.S. dollar headed toward a post-World War II low against the German mark and lost ground against other major currencies as pessimism deepened about the U.S. economic outlook.
The dollar was quoted at 1.5645 German marks in late trading in New York, down from 1.5780 marks late Monday. Earlier in Europe, the dollar fell to 1.5685 German marks, down from 1.5762 marks late Monday.
The dollar fell to 148.85 Japanese yen in New York from 150.25 yen late Monday.
COMMODITIES Gold Futures Dip in Profit Taking Gold futures prices fell slightly on New York’s Commodity Exchange after profit taking erased gains that had brought the market to its highest level in nearly six months.
On other commodity markets, oil futures fell, grains and soybeans advanced, livestock futures fell and pork bellies rose.
Trading resumed on the New York commodity exchanges, which were shut down Monday afternoon by an electrical blackout.
On the Commodity Exchange and the New York Mercantile Exchange, where oil futures are traded, exchange officials combined Monday’s incomplete trading day with Tuesday’s session for price-quoting purposes. Therefore, the quoted changes Tuesday in settlement prices for those commodities were relative to Friday’s settlement prices, not to the prices at which the markets stopped trading Monday.
Market Roundup, D8
