STOCKS : Dow Ekes Out Gain of 6.68 as Oil Prices Fall
Tumbling oil prices boosted blue chips Wednesday, but worries over corporate profits, budget bickering and the Mideast stalemate kept most stocks under pressure.
The Dow Jones industrial index closed up 6.68 points at 2,387.87, after earlier rising 28 points.
But losing issues outnumbered gainers by 832 to 655 on the New York Stock Exchange. Big Board volume came to 161.26 million.
Oil prices were the main influence on the Dow: crude for November delivery slid $2.17 on the New York Mercantile Exchange to $36.72. But the broader market was hurt by other news that sapped investor confidence. The Standard & Poor’s 500 index slipped 0.16 point to 298.76.
The only bright spot was a sharp rally in high-tech stocks that helped boost the NASDAQ over-the-counter composite index 1.34 to 326.78, a 0.4% rise.
Overall, traders cited uneasiness over third-quarter earnings, the budget deadlock, the lingering stalemate in the Persian Gulf and rising fears of a deep recession.
Traders were watching closely for developments on the budget. The Senate and the House have now produced separate proposals to cut the deficit, and the financial markets are hoping for a package that will allow credit to ease.
But earnings disappointments--and expectations of a long economic slide ahead--could destroy any rally based on interest-rate hopes, many analysts said.
Among the market highlights:
* Citicorp, which reported a plunge in third-quarter earnings Tuesday, fell 1/4 to 12 3/4, a 52-week low. Several brokerage firms cut ratings and estimates on the bank. The Midwest’s Banc One fell 2 1/2 to 20 7/8 after Bear Stearns and Shearson Lehman cut their estimates on the firm after it reported lower-than-expected earnings.
Some battered S&Ls; staged modest rallies after their earnings reports, however. Ahmanson gained 3/4 to 12 1/4 and Great Western inched up 3/8 to 9 1/2. But Citadel Holding tumbled 2 1/2 to 30 1/2 and HomeFed lost 5/8 to 6 1/2 on renewed credit worries. Volatile stock Coast Savings gained 3/8 to 2 5/8.
* Tech stocks were broadly higher in what analysts said was a reaction to perceived bargain prices in many of the issues, and short covering by traders who had correctly forecast the stocks’ recent plunge. Apple jumped 1 1/2 to 26 1/2, Sun Microsystems rose 2 1/8 to 21 1/2, Intel added 1 to 32 and Conner Peripherals rose 1 to 17 1/8.
AST Research jumped 1 1/2 to 16 1/2, Advanced Logic rose 1 1/4 to 6 1/4 and Quantum added 1 3/8 to 14 1/4, all on strong earnings news.
* Caesars World rose 1 to 14 5/8, continuing to gain on takeover rumors. Competitor Showboat also advanced, up 1/2 to 3 3/4.
* Pepsico lost 7/8 to 22 3/4. C. J. Lawrence and Salomon Bros. cut their ratings on the stock. Traders said Salomon also cut its rating on Coca-Cola, off 1/8 to 41 5/8, and Procter & Gamble, down 7/8 to 74 7/8.
* United Technologies, which reported a 7.5% rise in third quarter earnings, gained 1 3/8 to 46 5/8.
* MCI Communications lost 1 1/8 to 29 5/8 in heavy volume after it reported a third-quarter loss of $168 million, or 69 cents a share.
Tokyo stocks closed higher for the third straight day. The key 225-share Nikkei index closed up 253.26 points at 23,859.36.
German shares closed lower for the second straight day in lifeless trading. The 30-share DAX index fell 19.93 points to close at 1,440.79.
In London, stocks closed lower but above the day’s worst levels. The Financial Times 100-share index lost 15.6 points at 2,068.0.
CREDIT: Bond Prices Close Little Changed Bond prices finished flat, influenced by mixed economic reports and plans for a record 2-year Treasury note auction.
The Treasury’s key 30-year issue rose about $1 per $1,000 in face amount. Its yield, which falls when the price rises, eased to 8.88% from 8.89% late Tuesday.
Traders said Commerce Department reports showing weakness in the housing industry but rising industrial production in September injected confusion into the market because they signaled recession and growth at the same time.
The federal funds rate, the interest on overnight loans between banks, traded at 6%, down from 7.938% late Tuesday. The drop was due to internal market factors and was not considered a sign of easing by the Federal Reserve.
CURRENCY: Dollar Sharply Lower Against Yen The dollar plunged anew against the Japanese yen and finished mixed against other major currencies in busy trading.
Much attention focused on the yen, which rose significantly against the dollar. Traders said Japanese money managers are bringing their money home in an effort to support a weakening stock market and banks that have suffered declines in capital ratios.
“People expect (Japan’s) Ministry of Finance to keep yen interest rates fairly high,” which attracts investors, said Bob Morrissey, trader at the Bank of Boston.
The dollar fell sharply in Tokyo, where the U.S. currency settled at 125.80 Japanese yen, down from 128.05 yen on Tuesday. In New York, the dollar closed off its lows at 125.43 yen but still was down from 126.79 yen on Tuesday.
The dollar also fell to an all-time low of 1.504 German marks in Europe Wednesday. The dollar later recovered to close at 1.512 marks, up from 1.511 Tuesday.
COMMODITIES: Gold Prices Stage Minor Comeback Gold futures rebounded moderately after three days of steep losses on New York’s Commodity Exchange. Analysts said the rally was an overdue correction.
Gold for October rose $4.70 to $366.70 an ounce; October silver added 5.6 cents to $4.19.
Elsewhere, orange juice futures dropped to new four-year lows amid speculation that Brazilian processors will dump more frozen concentrate onto the U.S. market in a shakeout stemming from a large Florida crop forecast.
All contracts for future deliveries of frozen concentrated orange juice plunged the permitted daily limit of 5 cents a pound on the New York Cotton Exchange except the November contract, which has an expanded limit and fell 5.85 cents to $1.12 a pound. The November close was the lowest for a near-month juice contract since 1986.
