FINANCIAL MARKETS : STOCKS : Dow Up 3, but Rest of Market Closes Mixed
Blue chip stock prices rose slightly Monday, but the broader market was mixed as continuing uncertainty over the Mideast crisis slowed the pace of trading to near its lowest level of the year.
The Dow Jones industrial index rose 3.22 points to close at 2,567.33, but declining issues outpaced advances 763 to 672 on the New York Stock Exchange. Big Board volume came to a scant 110.60 million shares, the year’s third slowest, against Friday’s 133.39 million.
In addition to the Mideast crisis, in its seventh week, a lack of progress in U.S. budget talks also impeded interest. Big investors continued to boycott stocks.
“There are too many big question marks,” said David Holt, technical research chief at Wedbush Morgan Securities. “Institutions don’t feel they have to race in to start committing money.”
News from the Gulf, though scant, offered little encouragement. There were reports that Iraq was rounding up young Kuwaitis for the Iraqi army.
Meanwhile, pro-Iranian groups threatened to hit American interests around the world if U.S. troops attacked Iraq. That helped send oil prices up sharply again.
On the budget front, House Speaker Thomas Foley said he expects congressional and White House negotiators will reach agreement on a plan by early today.
Still, analysts said they were not hopeful.
“No one has any faith in anything happening,” said Kenneth Gerbino, head of the investment firm that bears his name.
Among the market highlights:
* Oil stocks once again led the short winner’s list, as oil rocketed higher. Arco gained 1 3/4 to 141 5/8, a 52-week high. Chevron jumped 1 3/4 to 77 7/8, Unocal added 1 to 33 1/4 and Halliburton rose 1 1/4 to 55 7/8.
* The flip side of the oil rally was that many oil users hit new 52-week lows. AMR, parent of American Airlines, lost 3/8 to a new low of 42 7/8. Chrysler also closed at its 52-week low, losing 1/8 to 11 7/8. Others on the new-lows list included Goodyear, off 7/8 to 19, and computer firm Unisys, off 1/4 to 7 7/8.
* Microsoft climbed 1 to 60 3/4 on speculation that the company could strengthen its relationship with IBM on key operating system and software issues, analysts said. IBM was up 3/4 to 105 1/8.
* McDonnell Douglas gave up 1 7/8 to 50. The stock had been on a hot streak recently. Elsewhere in the defense group, Teledyne rose 1 3/8 to 19 5/8. There was no news.
* Two small Southland stocks took big percentage hits on low volume. Barry’s Jewelers dropped 3/4 to 3 1/4. Dick Clark Productions fell 3/4 to 3 1/2.
* L.A.-based Magnetek rose 1/2 to 9 1/4 after naming its president, Frank Perna, as CEO, a new post.
* Barden Corp. jumped 30 1/2 to 63 on the over-the-counter market. The ball bearings maker agreed to be bought by Fag Bearings for $66.50 a share.
* General Mills added 1 1/4 to 85 1/4. The company said it expects 1991 to be another year of record sales and earnings.
* UAL Corp. was off 1 7/8 to 97 3/8. A UAL union terminated an agreement with Condor Partners LP concerning any proposed acquisition of the airline company.
In London, shares ended little changed after recovering early losses, helped by a stronger London futures market.
The Financial Times 100-share index rose 0.5 points to 2,094.3. Stocks ended generally lower in West Germany. The 30-share DAX index lost 12.92 points to finish at 1,541.15.
CREDIT Government Bond Prices Head Down Most government bond prices slid in sluggish trading amid selling sparked by higher oil prices and impatience over the lack of a deficit reduction agreement.
The Treasury’s benchmark 30-year bond fell 13/32 point, or just over $4 per $1,000 face amount, after losing $5.94 on Friday. Its yield, which rises when the price falls, went up to 9.06% from 9.02% late Friday.
Activity was subdued. Traders refrained from staking out significant new positions ahead of a key inflation reading due today.
The Labor Department is scheduled to release the August consumer price index, and forecasters said it could register around 1%, reflecting the spike in crude oil prices that has occurred since Iraq seized Kuwait on Aug. 2.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 7.938%, up from 7.75% late Friday.
CURRENCY Dollar Pounded by Oil Price Increases The dollar fell sharply against major currencies, weighed down by the rise in oil prices.
The U.S. currency closed in New York at 1.548 German marks, down from 1.570 on Friday, and at 136.55 Japanese yen, down from Friday’s 137.00. The British pound rose to $1.914 from Friday’s $1.892.
“The dollar opened weaker and continued under pressure over the course of the day,” said Anne Parker Mills of Shearson Lehman. She said the dollar was in a “no-win” situation with respect to the U.S. budget deficit.
A budget accord would be taken as a sign of lower interest rates, which would be bearish for the dollar, while a failure to reach an accord would underscore problems in the economy, Mills said.
COMMODITIES Gold, Oil Futures Advance Sharply Gold futures prices rose strongly on New York’s Commodity Exchange as fears of tightening oil supplies pushed crude oil futures to record highs, spurring interest in gold as an inflation hedge.
But precious metals analysts said gold’s gains were relatively small compared to the advance in energy prices, suggesting that the historical relationship between the two markets has changed.
Gold futures settled $4.20 to $4.30 higher in New York, with the spot September contract at $389.40 an ounce, up $4.30. The more actively traded contract for delivery in October closed at $390.60.
Silver futures ended 1.6 to 1.9 cents higher, with September at $4.76 an ounce, up 1.6 cents.
The rally extended to five days a run-up in gold prices following a $10.90 plunge in the September contract on Sept. 10. Gold now has regained all but 10 cents of that amount.
John Jonat, a trader with Deak International, said traders are focusing more on a perception that higher oil prices and the military buildup in Saudi Arabia will send the U.S. economy into a recession than the inflationary implications of higher oil prices.
“I don’t think the old relationships . . . are really in effect any more,” he said. “I don’t see huge investment demand for gold right now coming to the rescue. I don’t think people are rushing in to buy it again.”
On other commodity markets, livestock and meat futures rose sharply, soybeans fell and grain futures advanced.
Market Roundup, D10
