STOCKS : Dow Rises 18.32 After See-Saw Day of Trading
Wall Street stocks closed higher Monday after a roller-coaster session that saw the Dow Jones industrial index fall by more than 36 points and rise by more than 37.
Analysts said traders were encouraged by lower oil prices and cheaper gold. Earlier, the index fell on worries about IBM’s earnings.
The Dow climbed 18.32 to 2,416.34, after rising 32.92 on Friday. In the broader market, advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 802 up, 748 down and 441 unchanged. Big Board volume totaled 164.98 million shares, down from Friday’s 187.94 million.
“It’s been an extremely volatile day,” said Alfred Goldman, technical analyst at A. G. Edwards & Sons. “The conviction both among bulls and bears is so thin.”
Buying was boosted in the afternoon by a plunge in oil prices. Short covering--by traders who had correctly guessed stocks were headed lower recently--also helped lift prices.
Investors also drew encouragement from President Bush’s comment that he was confident Congress would meet its Oct. 19 deadline for completing a deficit-cutting budget blueprint.
“That’s the type of good news we need to get a better market atmosphere,” said Ron Doran, director of C. L. King & Associates’ institutional trading. “But there’s the question of whether we’ll get fluff.”
In the morning session, stocks skidded when IBM announced that its third-quarter earnings topped $1 billion, more than a 26% gain from the same period a year ago.
Traders said the earnings fell within predicted estimates but that analysts participating in a conference call with the company were concerned about projected 1991 earnings. IBM ended the day down 1 at 99 1/4.
Among the highlights:
* Consumer products firms were among the day’s better performers, as investors continued to favor recession-safe issues. Gillette rose 3 to 55 3/8, General Mills added 2 5/8 to 83 3/8, Wrigley rose 1 7/8 to 47 1/2, Ralston Purina climbed 1 7/8 to 101 3/8 and Procter & Gamble closed up 1 5/8 to 76 1/2.
* The market continued to react sharply to earnings disappointments. Archer-Daniels lost 2 1/8 to 21 1/2. It reported first-quarter profit of 36 cents a share, compared to 40 cents a year ago. On the plus side, better-than-expected earnings lifted Dover Corp. 2 3/8 to 31, Phelps Dodge 3/4 to 48 3/4, and Magnetek 1/4 to 7 7/8.
* Eastman Kodak jumped 3 1/4 to 37 7/8 on news of a smaller-than-expected patent infringement award to Polaroid. Prudential-Bache cut its rating on Polaroid, which plummeted 6 1/2 to 22 3/4, and Shearson Lehman cut its 1991 earnings projection.
* The tech sector was mixed. Compaq added 1 to 37 3/4. The company unveiled a new notebook personal computer. Elsewhere, Intel rose 1 3/8 to 31 3/8. It introduced microchips that it said will radically simplify the job of building lightweight but powerful notebook-sized personal computers. But NCR plunged 3 1/2 to 46 1/2 after saying orders have been disappointing recently, and Syntellect tumbled 5 to 7 3/4 after reporting weak quarterly earnings.
Meanwhile, Lotus Development dropped 1 1/2 to 12 3/4 in anticipation of third-quarter earnings to be released today.
* Caesars World jumped 1 7/8 to 13 7/8. The casino company declined comment on the activity.
In Tokyo, stocks rose sharply as investors bought up issues seen benefiting from a stronger yen, as well as the shares of financial companies viewed as having been oversold during recent market declines. The Nikkei 225-share average rose 719.04 points, or 3.21%, to close at 23,109.20.
In Frankfurt, Germany, the 30-share DAX index ended 19.19 points higher at 1,478.89.
London shares closed slightly higher but below gains made earlier. The Financial Times 100-share index closed up 1.5 points at 2,101.9.
CREDIT: Bond Prices Rise in Quiet Session Government bond prices closed slightly higher Monday after a listless session.
The Treasury’s benchmark 30-year bond gained 7/32 point, or $2.19 per $1,000 in face amount. Its yield slipped to 8.93% from 8.95% late Friday.
Government bond prices rose slightly when the market opened after rising overseas, then slipped slightly and remained at virtually the same level the rest of the day.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8%, up from 7.875% late Friday.
CURRENCY: Technical Factors Push Dollar Higher The dollar finished up against most currencies, boosted by technical factors that analysts predicted would be short-lived.
“The dollar seems more bid than it has in the recent week or two,” said Charles Wheeler of Swiss Volksbank.
Traders said they doubted that the dollar’s rise would last due to lingering worries over the economy and the lack of a concrete agreement to cut the federal budget deficit.
The dollar closed at 1.526 German marks, up from 1.524 Friday.
However, the dollar fell against the yen across the board. It closed in New York at 127.73 yen, down from 129.05 Friday. In Tokyo, it fell to a closing 128.83 yen from 129.98 yen Friday. Later, in London, it fell to 128.05 yen.
“Most of the activity was in cross trading with movement out of high-yielding currencies . . . and movement mostly into yen,” said Ronald Holzer, chief dealer with Harris Trust & Co. in Chicago.
COMMODITIES: Oil Prices Decline Amid Profit Taking Crude oil prices fell sharply as traders took profits amid the stand-off in the Persian Gulf. Gasoline and heating oil also posted big losses.
On other commodity markets, oil futures fell; near-term orange juice rebounded; grains and soybeans were lower, and livestock and meat futures were mixed.
Monday’s lower oil prices also were linked to expectations that U.S. consumption of crude oil has begun to weaken on a seasonal basis as refineries retool to produce more heating oil and less gasoline, said Peter Beutel, energy analyst with the Pegasus Econometric Group of Hoboken, N.J.
Light sweet crude oil futures settled 57 cents to $1.74 lower on the New York Mercantile Exchange, with November at $37.95 a barrel, down $1.74; heating oil was 2.17 to 3.29 cents lower, with November at $1.0207 a gallon, and unleaded gasoline was 1.55 to 2.7 cents lower, with November at 94.95 cents a gallon.
Frozen concentrated orange juice for November delivery rose 4.5 cents to $1.1795 a pound on the New York Cotton Exchange, rebounding from a loss of 16.45 cents Friday. All other orange juice contracts fell their permitted daily limit of 5 cents, though, in a continued reaction to a government report that predicted a bumper Florida orange crop.
Harvest pressure helped push most grain and soybean futures prices lower Monday on the Chicago Board of Trade.
Analysts said dry weekend weather in the Midwest allowed farmers to get back into their fields to resume the soybean and corn harvest, which was stalled by heavy rains early last week.
