STOCKS : Investor Fears Slow Trading; Dow Up 11.64
Wall Street stocks Monday ended a listless session mixed, with a rebound in the bruised blue chip sector but little interest in most other stocks as investors remained wary about rising Mideast tensions.
President Bush on Monday for the first time referred to the estimated 2,500 Americans trapped in Kuwait and the 600 in Iraq as “hostages.” Iraq also confirmed that it had moved a number of foreigners to military bases and other potential targets.
The Dow Jones industrial index finished up 11.64 at 2,656.44. But declining issues outnumbered advancers by about 3-to-2 in nationwide trading of New York Stock Exchange-listed stocks, with 629 up, 920 down and 457 unchanged.
NYSE volume dropped to 129.63 million shares from Friday’s 212.56 million. After a 72-point Dow loss last week, investors seemed in no mood to take chances, especially after two major Wall Street brokerages, Salomon Bros. and Shearson Lehman, issued forecasts of a recession.
Stocks reached session highs after Bush called for the immediate release of Western detainees in Iraq and Kuwait. “The rhetoric is getting more heated,” said David Holt, technical analyst at Wedbush Morgan Securities in Los Angeles.
He said the rise in the Dow industrials represented “selective buying” by money managers seeking a toehold in the market rather than any trend in stock prices. “They buy the lesser of the evils, and thus more liquid, presumably safer investments.”
Although the Dow inched up, the NASDAQ over-the-counter composite index slumped 4.90 to 388.59, a 1.3% loss.
“If there continues to be a stalemate (in the Mideast), the 2,600 level, give or take 50 points, would probably contain the market,” said Steve Poling, executive vice president at investment firm AMEV Advisors. “But all bets are off if we start shooting.”
Market highlights:
* Brokerage Smith Barney reiterated buy ratings on several oil stocks. Within the sector, Mobil rose 3/4 to 67, Arco gained 1 5/8 to 139 1/8, Chevron added 1 3/8 to 80, Texaco rose 1 3/4 to 65 5/8, Amoco jumped 1 3/8 to 58 and Pennzoil soared 2 1/8 to 82 1/8.
Among independent oil and gas stocks, Apache rose 7/8 to 17 3/4, Pogo gained 7/8 to 8 1/2 and Sabine Royalty added 1 1/8 to 13.
* Defense stocks jumped on prospects for more weapon sales to Saudi Arabia and after President Bush said a strong defense budget was needed to support U.S. troops. McDonnell Douglas rose 1 1/8 to 44 7/8, General Dynamics gained 1 to 27 1/8, Martin Marietta added 3/4 to 35 7/8, Northrop rose 5/8 to 15 3/4 and Litton gained 1 1/4 to 73. But Lockheed inched up just 1/8 to 28 3/8 and Rockwell fell 1/2 to 22 3/8.
* Fluor tumbled 2 1/2 to 35 7/8. Investors appear to be nervous about what may happen with some of the engineering firm’s Mideast contracts.
* California banking and real estate stocks continued to fall. First Interstate lost 1/2 to 28 7/8, Security Pacific fell 3/8 to 28 and Kaufman & Broad eased 1/4 to 7.
* Economic worries also hit high-tech stocks. Microsoft dropped 4 3/4 to 55 1/2, Oracle lost 1 1/2 to 13 1/2, Compaq fell 2 3/8 to 47 3/4 and Intel eased 1 to 33 1/4.
* Some grocery chains rose, possibly benefiting from some investors’ search for recession-resistant stocks. A&P; jumped 1 5/8 to 52 3/4, Winn-Dixie added 1 3/8 to 73 1/4 and Vons inched up 1/8 to 19 5/8.
* Gitano Group plunged 4 7/8 to 19 3/8. Traders said brokerage Goldman Sachs downgraded the clothing maker.
In Tokyo, the key 225-share Nikkei average fell 296.25, or 1.1%, to 26,490.47 in narrow-range trading on extremely thin volume, as traders remained wary over the Persian Gulf crisis.
In London, the Financial Times-Stock Exchange 100 index fell to 2,156.6, a loss of 20.3 or 0.9%. In Frankfurt, West Germany, the 30-share DAX index slumped 30.19 points or 1.8% to 1,635.69, a 1990 low.
CREDIT: Bond Prices Reflect Mixed Outlooks
Bond prices were mixed in light trading on conflicting outlooks for oil prices and interest rates.
The credit markets appeared slightly hopeful about the prospects for steadier oil prices but doubtful about the chances for lower interest rates.
The Treasury’s benchmark 30-year bond eased 1/32 point, or 31 cents per $1,000 face amount. Its yield held at 8.93%, unchanged from Friday.
Analysts predicted that Saudi Arabia, the world’s largest oil exporter, would fulfill its pledge to boost output by as much as 2 million barrels a day. Production increases would tend to dampen inflation fears prompted by the Persian Gulf crisis and help fixed-return investments such as bonds.
But the outlook for interest rates kept bond traders from getting their hopes up too high. The Federal Reserve’s policy-making arm meets in Washington today to discuss whether to ease credit.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8%, up from 7.75% late Friday.
CURRENCY: Dollar Manages to Halt Losing Streak
The dollar closed mostly higher against major currencies in moderate trading, recovering ground after many days of decline.
Analysts said much of the dollar’s advance resulted because traders took profits in currencies that have soared against the dollar and temporarily parked those funds in dollars again.
The dollar closed at 1.564 German marks in New York, up from Friday’s close of 1.550, which was an all-time low for the dollar against the mark.
But the dollar lost ground against the Japanese yen, falling to 146.51 from 147.60 on Friday.
COMMODITIES: Gold Futures Rise, but Silver Declines
Gold prices inched up as investors continued to seek refuge in the metal. On the New York Commodity Exchange, gold closed at $410.10 an ounce, up 50 cents from Friday.
Silver, meanwhile, fell 5 cents to $5.13 an ounce on the Comex.
West Texas Intermediate, the benchmark U.S. crude, dipped 7 cents per barrel to $28.56 for September delivery, but prices for later months were up sharply.
Elsewhere, prices of orange juice futures settled at their lowest levels in nearly eight months after two Brazilian processors cut their prices for the first time since a Christmastime freeze shriveled the Florida orange crop.
Wholesale frozen concentrated orange juice futures settled 1.95 to 5 cents lower on the New York Cotton Exchange, with the contract for delivery in September down 1.95 cents at $1.687 a pound.
