STOCKS : Dow Climbs 21 in the Slowest Trading of Year
Stocks scored modest gains Friday in the slowest session of the year as traders, fearing new tensions in the Persian Gulf, squared their books and opted to get away for the long holiday weekend.
The Dow Jones industrial average closed up 21.04 points to 2,614.36. For the week, the average was up 81.44.
In the broader market, the average price per share rose 31 cents Friday and advancing issues outnumbered declines by about 3-to-2 in nationwide trading of New York Stock Exchange-listed stocks.
Big Board volume of 96.5 million shares was the lowest of the year, eclipsing the low of 111 million shares on July 6. Trading before the Labor Day weekend was the slowest since Dec. 26, 1989, when only 77.6 million shares changed hands.
Investors found little in the news to inspire buying, with the Persian Gulf conflict at a virtual stalemate.
Investors were generally unwilling to hold large positions because of the Middle East uncertainty.
“It looks like it’ll be very difficult to get any negotiated withdrawal (of Iraq) from Kuwait,” said Nomura Securities vice president Peter Davies.
Steve Poling, executive vice president at AMEV Advisors Inc., a mutual fund firm, said, “A shooting war is somewhat already in the market. But the next thing is how many weekends will go by and nothing happens.”
Among individual issues:
* Bank of New England rebounded 1 1/8 to close at 2 1/8 after the U.S. Comptroller of the Currency discounted rumors circulating Thursday that federal regulators plan to intervene due to the bank’s financial problems.
* Some energy stocks gained as crude oil prices rose. Amoco added 1 to 55, British Petroleum rose 1 3/8 to 82 1/8, Oryx Energy gained 3 to 51 1/4, Exxon climbed 1 1/8 to 50, Atlantic Richfield rose 1 3/8 to 134 7/8 and Chevron gained 5/8 to 75 7/8.
* Medchem Products’ shares rose 1 1/4 to 6 5/8. The company said it and Pharmacia have sought a court adjournment in a patent litigation case because the two firms are close to a settlement.
* The stock of Environsafe Services dropped 3 3/8 to 7 on concerns that denial of the company’s petition to build a new waste disposal cell would result in a significant loss of business within two years.
In foreign trading, strong buying by institutional investors propelled Tokyo stocks to their second straight advance despite investor unease over events in the Middle East. The Nikkei 225-share index closed up 308.41 points at 25,978.37, marking a total gain of 1,812.61 points for the week.
Share prices on London’s stock exchange also rose in low-volume, directionless trading. At the close of trading, the Financial Times 100-share index was up 9.2 points at 2,162.8, the day’s high.
In Frankfurt, the mark’s strength against the dollar and continuing concern about the Gulf crisis kept share prices under pressure. The DAX index of 30 blue chips closed at 1,629.51, down 9.44 points from Thursday.
CREDIT Bond Prices Mixed in Short Session Bond prices were narrowly mixed in a quiet, abbreviated session amid signs the manufacturing economy improved in August in the Midwest.
The price of the Treasury’s bellwether 30-year bond fell 1/8 of a point, or $1.25 per $1,000 face amount. Its yield, which rises when the bond’s price falls, edged up to 8.98% from late Thursday’s 8.97%.
Other long-term issues were down, but short-term Treasury bonds were narrowly higher.
Analysts said a survey of Chicago purchasing managers, which indicated a slight improvement in the manufacturing sector, brought prices lower. The Chicago index of business activity rose to 49.2% in August from 48.3% in July.
Traders fear that the Fed would be less likely to relax its policy and allow interest rates to fall if the economy appears to be expanding.
Oil prices, which can portend a higher inflation rate, also helped put a damper on bond trading Friday.
Trading was extremely light Friday in advance of the Labor Day weekend, and the bond market closed several hours early. The U.S. financial markets will be closed on Monday.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.063%, up from 8% late Thursday.
CURRENCY Dollar Stages Sharp Gain Over Pound The dollar advanced against most major currencies except the Japanese yen as buyers added to their dollar holdings ahead of the long holiday weekend.
With the Middle East problems still unresolved, currency dealers decided to keep their portfolios balanced in favor of dollars, analysts said. The dollar’s rise also reflected technical maneuvers coinciding with the end of the month.
The most dramatic move of the day was made by the British pound, which weakened substantially. In New York, the pound was quoted late at $1.8905, compared to $1.92235 Thursday. Earlier, in London, the dollar also rose sharply against sterling with the pound falling to $1.8900 from $1.9225 Thursday.
The selloff in sterling represented an acceleration of the profit-taking that began Thursday when dealers judged the time was right to collect gains made during the British currency’s recent advance.
The dollar closed at 1.5765 West German marks, up from 1.5640 late Thursday.
The dollar had a mixed day against the Japanese yen. It began the trading day in Tokyo by rising 0.40 yen to close at 144.50 yen. Later, in London, it was quoted at 143.70 yen. At the end of New York trading, the dollar was quoted at 143.785 yen, down from 144.10 yen on Thursday.
COMMODITIES Oil Advances, Grain, Soybean, Metals Fall Grain and soybean futures prices were lower in quiet trading on the Chicago Board of Trade.
On other markets, energy futures rose, precious metals were lower, cocoa futures gained, orange juice retreated and livestock and pork futures were mixed.
Wheat prices were lower on technical factors involving deliveries for September contracts. Also weighing on futures prices was the cost of wheat being delivered in other parts of world.
Corn and soybean futures received some support following a sharp drop in prices through the week. But gains were eliminated by near-perfect weather in the Midwest, which is helping crop maturity and improving the size of yields.
Wheat settled 4.25 to 6.50 cents lower with the contract for delivery in September at $2.625 a bushel. Corn was 2 cents lower to 0.75 cent higher with September at $2.4325 a bushel. Oats were 2.25 to 4 cents higher with September at $1.05 a bushel. Soybeans were 0.50 cent to 3.75 cents lower with September at $6.01 a bushel.
Crude oil futures were steadily higher on the New York Mercantile Exchange, which analyst Robert Baker of Prudential-Bache Securities Inc. in New York attributed to continued concern over the crisis in the Middle East.
Light sweet crude was 12 to 55 cents higher with October at $27.32 a barrel.
Market Roundup, D6
