STOCKS : Dow Rises 14.85 as Traders Hunt for Bargains
Stock prices rose moderately Wednesday as investors searched for bargains and mulled the chance of a Federal Reserve-induced interest rate cut. Oil stocks and gas utility stocks led the way, as oil prices jumped again.
The Dow Jones index of 30 industrials, which had dipped 0.99 on Tuesday, rose 14.85 to 2,628.22. Advancing issues well outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 953 up, 571 down and 451 unchanged.
Big Board volume remained relatively light at 120.6 million shares, compared to 92.9 million shares Tuesday, the slowest trading day of the year so far.
“The market’s just sifting sand,” said Robert Stovall, president of Stovall/21st Advisers. He said the military standoff in the Persian Gulf is leaving the market “grinding down to slow action on slow volume.”
Stock prices rose in the afternoon on the belief that weak economic figures, including Friday’s scheduled report on U.S. employment, would prompt the Fed to loosen credit to boost the flagging economy, analysts said.
But some analysts fear that the stock market may be setting itself up for a fall. If the market gets overconfident about a Fed easing, and none occurs, “we could really tank,” said Alice Sadlo, vice president at McDonald & Co.
Investors are also anxious to see the results of this weekend’s summit between President Bush and Soviet President Mikhail Gorbachev, analysts said.
Among the market highlights:
* The Dow utility index was one of the best performers among major indexes, up 2.39 to 198.44, or 1.2%. Gas utilities and pipeline companies were strong, including beleaguered Panhandle Eastern, up 3/4 to 15 1/2, and Columbia Gas, up 3/4 to 47. Investors are betting gas companies will see business boom as energy users seek cheaper alternatives to oil.
* Oil stocks gained for a second day in a row. Arco jumped 3 1/8 to 138 3/4, Enron Oil rose 1 3/4 to 25 3/8, Mobil added 1 3/8 to 65 3/4 and Unocal rose 1 to 33 1/2.
* GE lost 1 to 60 1/4. Shearson Lehman cut its earnings estimates on GE and other electrical equipment firms, based on expectations that a softening U.S. economy will dampen consumer demand.
* Semiconductor companies were weaker as several brokerage firms, including Goldman Sachs, cut estimates and ratings. Chips & Technologies lost 3/4 to 11 1/2, Motorola fell 2 to 69 1/8, Intel eased 1 to 32 1/2 and Texas Instruments fell 3/8 to 27 3/8. The tech-stock group in general was weaker on the news.
* Wet Seal tumbled 2 1/4 to 12, though the Irvine-based clothing retailer denied rumors that August same-store sales declined.
* Some California banking stocks gained on a positive outlook from Merrill Lynch. Wells Fargo jumped 2 to 56 5/8 and Security Pacific inched up 1/4 to 27 1/2.
* Among other Southland stocks, bargain hunters chased depressed Mattel, pushing it up 1 5/8 to 19 5/8, financial services firm Broad Inc., up 1 to 8 3/8, and Optical Radiation, up 1 3/8 to 29 1/8.
In Tokyo, stocks fell sharply on Persian Gulf war fears, with the main market index flirting with its 1990 low before partially recovering to close with a 3.3% loss. The 225-share Nikkei average finished down 829.30 points at 24,078.34.
In London, stocks finished higher in low-volume trading. The Financial Times 100-share index was up 4.2 points to 2,152.2.
In Frankfurt, shares fell as a recent spate of disappointing corporate results added to the Gulf tension. The 30-share DAX index ended 25.80 points lower at 1,564.27.
CREDIT Bond Prices Rise Despite Gulf News Bond prices posted moderate gains in light trading after shaking off negative news from the Persian Gulf. The Treasury’s benchmark 30-year bond rose 1/2 point, or $5 per $1,000 face amount. Its yield, which declines as the bond’s price rises, fell to 8.96% from Tuesday’s 9.01%.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 10%, up from 8.125% late Tuesday. The gain was attributed to technical factors.
CURRENCY Dollar Plunges on Interest Rate Talk The dollar sank against all major foreign currencies Wednesday in trading punctuated by widespread talk of lower U.S. interest rates.
Heavy dollar selling began in Asia and carried over into later European and U.S. dealing.
The dollar was quoted at 141.65 yen late in New York trading, down from 143.40 on Tuesday. Early today in the Far East, the dollar was quoted at 141.40 yen.
The dollar finished in New York at 1.558 German marks, down from Tuesday’s 1.581.
COMMODITIES Wheat Futures End 6-Day Losing Streak Wheat futures rebounded strongly on the Chicago Board of Trade, ending a six-day decline amid speculation the United States will offer food credits to the Soviet Union. Wheat futures settled 3.50 to 6.75 cents higher, with the contract for delivery in September at $2.63 a bushel.
Other grain and soybean futures closed mostly higher after the Agriculture Department reported a slight deterioration in the condition of the U.S. soybean crop.
On the Commodity Exchange, gold futures for September continued to inch higher, rising $2.40 to $386.10 an ounce; silver for September added 1.6 cents to $4.73.
Market Roundup, D8
