STOCKS : Mideast Jitters Sink Market; Dow Dips 2.97
Stock prices fell modestly Tuesday as concerns about the Persian Gulf crisis and the U.S. economy kept many investors sidelined.
The Dow Jones index of 30 industrial stocks slipped 2.97 to 2,612.62. In the broader market, declining issues outnumbered advancers by about four to three in nationwide trading of New York Stock Exchange-listed stocks, with 609 up, 835 down and 513 unchanged.
Big Board volume fell again, to 113.22 million shares from 119.73 million Monday.
Higher oil prices served to dampen interest. Crude oil gave back some of its recent gains but stayed above $30 a barrel. October crude oil fell 54 cents to $30.76.
Investors looked forward to a congressional address scheduled by President Bush for Tuesday evening. But some analysts expected little of substance to emerge in the speech, meaning the Mideast crisis would continue to weigh on the market.
“I don’t see the market moving in one solid direction or another until the gulf crisis is resolved,” said John Brooks, analyst at Davis, Mendel & Regenstein.
Among the market highlights:
* A selloff of some tech stocks was led by Tandem, which dropped 2 1/8 to 11 1/2 on more than 2.8 million shares, the most active issue on the Big Board. Analysts at Smith Barney, Dean Witter and Paine Webber cut estimates after Tandem said the U.S. economic slump could hurt revenue growth.
Elsewhere, Compaq tumbled 2 to 43 1/4, and Apple Computer fell 1 3/4 to 34. First Boston cut earnings estimates on the firms. Other tech losers included Teradata, off 2 to 19 1/2, and Sun Microsystems, down 7/8 to 28 3/4.
* But IBM gained 1 5/8 to 107 1/2, continuing its recent strength. And Texas Instruments jumped 3 1/2 to 29 1/8 after saying it has a good opportunity to earn substantial royalty revenue from Japanese tech firms.
* Optical Radiation added 1 1/4 to 32, as investors continued to react to a strong earnings report. Fluor advanced 1 to 37, also on strong earnings.
* Nike climbed 3 1/2 to 71. Shearson Lehman raised its earnings estimates and reiterated a buy, based on the athletic shoe maker’s back-to-school sales.
* Some hospital stocks fell on word that Medicare will raise rates paid to hospitals just 1.4% in the year ahead, slimmer than expected. Humana dropped 1 1/8 to 44, FHP International lost 1/2 to 14 1/4 and PacifiCare gave up 1/8 to 16.
Ingres jumped 3 1/4 to 9. ASK Computer signed a definitive pact to acquire it for $9.25 a share.
* Georgia Pacific lost 1 3/8 to 36 7/8. Morgan Stanley cut its rating on the firm to “sell”from “hold” and lowered its 1991 earnings estimate.
In Tokyo, stocks ended lower on profit taking triggered by weak yen bond futures and losses on Wall Street. The key 225-share Nikkei average fell 476.24 points, or 1.9%, to 24,604.66, after surging 1,118.83 on Monday.
Share prices also fell in London. The Financial Times 100-share index closed down 2.7 points, or 0.1%, to 2,144.3.
West German shares ended broadly lower on extremely low volume as investors remained sidelined after sharp gains on Monday. The 30-share DAX index ended down 23.03 points at 1,577.42.
CREDIT Bond Prices Rise as Oil Falls Bond prices rose moderately as the credit markets continued to take their cue from oil prices.
The Treasury’s benchmark 30-year bond rose 3/8, or $3.75 per $1,000 face amount. Its yield, which moves inversely to the price, fell to 8.92% from 8.96% late Monday.
“It followed the pattern it has for most of the past month,” Joseph Liro, money market economist at S. G. Warburg & Co., said in describing the bond market’s linkage to oil prices.
Bond prices fell at one point in the day as oil prices approached $32 a barrel, peaking at $31.75. Late in the day, the bond market was helped by expectations that President Bush would announce a broad agreement with congressional leaders on plans to cut the federal budget deficit.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 7.938%, unchanged from Monday.
CURRENCY Dollar Up, but the Action Is in Yen The dollar rose, but the Japanese yen continued to take center stage on foreign exchange markets.
Trading was choppy and thin in New York. Currency dealers reported the dollar initially surged, following the lead of Asian and European markets, before settling back to end moderately higher.
European currency dealers, meanwhile, said the dollar got a lift from speculation that the cost of German unification will undermine the mark.
The West German government said Monday that it would pay 12 billion marks, or about $8 billion, to the Soviet Union to help repatriate the country’s soldiers from East Germany, but overall cost estimates of unification run into the hundreds of billions of marks.
The Japanese yen was the focus of activity on many foreign exchange markets where dealers sold yen to pocket profits made during the currency’s recent advance.
In New York, the dollar ended at 140.30 yen, up from 139.52 yen late Monday. Against the German mark, the dollar bought 1.585 marks, up from 1.581 on Monday.
COMMODITIES Soybean Futures Up as Crop Worsens Soybean futures prices rose strongly on the Chicago Board of Trade, extending a rally rooted in the worsening condition of the new crop as harvest time approaches.
On other commodity markets, platinum futures dropped while other precious metals advanced; and livestock and meat futures were mixed.
Soybean futures settled 5 to 7.25 cents higher, with the contract for delivery in September at $6.25 a bushel.
Gold futures finished $1.70 to $2.40 higher, with September at $380.50 an ounce, up $1.90
Market Roundup, D6
