STOCKS : Hussein Visit Boosts Market; Dow Gains 0.5
Stock prices rose modestly Wednesday in light trading, boosted by moderating oil prices and signs that the Mideast crisis may be easing.
The Dow Jones index of 30 industrial stocks rose a slight 0.50 point to 2,748.27. Earlier, the Dow was up as much as 22 points.
Advancing issues outnumbered declining ones by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 887 up, 619 down and 494 unchanged. Big Board volume was 135.21 million shares, up from 130.32 million in Tuesday’s session.
Analysts said the market reacted favorably to the visit by Jordan’s King Hussein to the United States. Hussein was carrying a letter from Iraqi President Saddam Hussein to President Bush. The king was to meet with Bush today.
Stock prices initially spurted on expectations that some breakthrough was imminent in the Mideast, traders said, sending the Dow 22 points higher in the first half-hour of trading. When no breakthrough materialized, prices moved lower and “the market settled down to something that was more reflective of what’s going on in the market itself,” said Walter Murphy, analyst at Merrill Lynch & Co.
The market received a boost when government bond prices rose, though bond trading was choppy. Stocks were “playing tag all day with bond prices and oil prices,” Murphy said.
Market highlights:
* Oil and oil-service stocks were mostly lower. Arco fell 1 3/8 to 133 3/4, Baker Hughes lost 1 1/4 to 31 1/2, Exxon slipped 1/4 to 52 and Texaco dropped 7/8 to 62 3/8.
* Some health-care stocks were strong, as investors continued to search for recession-resistant businesses. Humana jumped 2 to 48 1/2, Community Psychiatric added 7/8 to 26 3/8, and National Medical Enterprises rose 3/4 to 35 5/8.
* Food and tobacco stocks also saw more bargain hunting. Heinz gained 1 1/8 to 34 3/4, Philip Morris added 1/2 to 47 1/4, and Hershey rose 1/2 to 38.
* Among Southland firms, Magnetek rose 1/2 to 9 7/8 after reporting strong quarterly earnings. But IDB Communications dropped 1/2 to 8 after reporting a quarterly loss. Homebuilder Kaufman & Broad fell 1/4 to a new 52-week low of 7 7/8.
* AmBase plunged 4 3/4 to 2 3/4. The financial holding company said it is unlikely that it will pay a special dividend that had been promised to shareholders.
* Airline stocks fell further on fare-war fears. Delta lost 1/2 to 57, and AMR dropped 7/8 to 48 1/8.
CREDIT Bonds Higher in Seesaw Session Bond prices ended higher Wednesday after sharp movements prompted by speculation of lower oil prices and a quick resolution to tensions in the Middle East.
The Treasury’s benchmark 30-year bond gained 1/8 point, or $1.25 cents per $1,000 in face amount. Its yield slipped to 8.76% from 8.77% late Tuesday.
Uncertainty over oil prices and developments in the Persian Gulf continued to dominate bond market action. Analysts are hoping for a speedy resolution that would stabilize trading and temper rising oil prices, which feed inflation.
Bond prices opened sharply higher following heavy buying overnight in overseas markets, tumbled after crude oil prices climbed on comments by President Bush, and rose sharply as oil prices fell in afternoon trading. Traders took advantage of the early rise to sell and make profits.
“People are still keeping a real close eye on the situation in the Middle East to help clarify what’s going on,” said Steven A. Wood, economist with BankAmerica Capital Markets. “I think most market participants would like to see a quick resolution.”
Trading was light because of the continued instability. In addition, a heavy supply of securities following last week’s Treasury refunding auction continued to foster fears of oversupply, which would push down bond prices.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.375%, up from 8.063% Tuesday.
COMMODITIES Gold Prices Ease After Sharp Gains Gold and silver fell Wednesday after a roller-coaster ride in which traders hung on every bit of information about the crisis in the Persian Gulf.
Gold futures for current delivery eased $2.20 to $402.60 an ounce. Silver lost 12.3 cents to $5.07.
“The market was due for a setback, following the recent steep gains,” said William O’Neill of Merrill Lynch. “But the bull trend is still very much intact.”
PaineWebber analyst Fred Demler said $425 an ounce would be the “logical” and “obvious” target for gold. That would match its highest level of the year, reached in early February.
Crude oil futures finished little changed on the New York Mercantile Exchange after a day of up-and-down trading tied to developments in the Persian Gulf.
West Texas Intermediate crude oil futures for September settled at $26.46 a barrel, up 4 cents.
Elsewhere, soybean futures settled 2.25 cents lower to 3 cents higher, with the contract for August delivery at $6.13 a bushel.
The contract tumbled from near its opening level of $6.105 to $6.025 at midday after a report that Brazil would make available to farmers the equivalent of $6.3 billion in loans, prompting speculation that next year’s crop would be large. But prices rebounded with a report that Brazilian President Ferdinand Collor de Mello said the amount would be equal to $4.2 billion.
Market Roundup, D8
