STOCKS : Dow Up 10.15 on Hopes for Budget Accord
Wall Street stocks again closed mixed in listless trading Wednesday as investors focused on the midnight deadline for a deal to cut the federal budget deficit.
The 30-share Dow Jones industrial index rose 10.15 to 2,504.21, after a lackluster day that saw investors bargain hunt in tech stocks and continue to seek “safe” consumer product and drug stocks. Transportation and over-the-counter stocks were mostly lower.
On the New York Stock Exchange, advancing issues just barely outnumbered declines in nationwide trading, with 762 up, 728 down and 490 unchanged.
Big Board volume was a moderate 149.29 million shares, compared to 146.30 million Tuesday.
Analysts said the seesawing talks on the federal budget again factored in investors’ thinking. The White House said it was optimistic that a pact would be reached before the Wednesday midnight deadline.
Some analysts questioned the weight of budget deliberations on a market with so many more immediate problems to worry about--turmoil in the Mideast, weak corporate earnings, a possible recession and a dearth of investor interest. “It’s a mixed market with mixed feelings,” said Ed Shopkorn, trader at Mabon Nugent.
It didn’t help stocks that crude oil for December delivery rebounded $1.71 to $31.08 a barrel Wednesday, after recent losses.
Many traders said whatever real stock buying there is, it is highly focused and still exceptionally cautious. “These are primarily issues that have done reasonably well in terms of earnings and those that seem to be defensive,” said Jack Barbanel, president of First Global Asset Management.
Among the market highlights:
* Some investors looked for value among downtrodden major tech stocks. IBM rose 1 7/8 to 108 5/8, NCR added 1 5/8 to 51 1/4, Digital Equipment rose 1 to 51 3/4 and Compaq jumped 4 1/8 to 47 1/2. Compaq’s third-quarter earnings exceeded expectations.
* On the minus side, Sun Microsystems tumbled 4 3/8 to 15 3/4. Several analysts cut 1991 estimates after the company reported disappointing first-quarter earnings.
* MCA plunged 8 7/8 to 50 before trading was halted. A Japanese news report said Matsushita Electric had requested a two-week recess in talks on a possible merger. Matsushita later said its discussions are proceeding.
Other entertainment stocks were mixed. King World jumped 2 to 22 1/2, but Cap Cities/ABC continued to drop on a weakening ad outlook. The stock lost 5 to 395.
* Continental Air, which said it would consider investment offers by outside parties to help the company through its financial straits, fell 1 5/8 to 4. Other airlines also weakened. USAir lost 1 1/8 to 16 5/8, Federal Express dropped 2 5/8 to 35 7/8 and AMR, parent of American Airlines, slipped 1/2 to 47 3/4.
* In the food and consumer products group, Philip Morris added 1/4 to 48 1/4, General Mills gained 2 1/4 to 90 1/4, International Flavors & Fragrances rose 2 to 68 7/8, Upjohn rose 2 3/8 to 39 1/2 and Vons supermarkets jumped 1 1/4 to 17 3/4. Many investors continue to focus on these stocks because they are expected to do well in a recession.
* Among financial stocks, Wells Fargo gained 1 3/8 to 50 1/2 on news that investor Warren Buffett had taken a 9.8% stake. But the report failed to rally support for other banks. Citicorp lost 3/4 to 11 7/8, Chase dropped 3/8 to 11 7/8 and Security Pacific fell 1/2 to 20 7/8.
* L.A.-based Diagnostic Products fell 1 3/4 to 24 3/4, after sliding 4 on Tuesday because of disappointing earnings. But the stock rallied from a low of 22 1/4 Wednesday after the firm set plans for a stock buyback.
* Thinly traded Neutrogena rose 3 to 15 3/4. There was no news.
In Japan, stocks closed lower as investors took advantage of a weaker yen to take profits after seven straight days of gains. The 225-share Nikkei index fell 421.42 to 24,876.88.
German share prices ended a volatile session lower, as a strong mid-session rally sputtered and prices, which had been up 1.2% earlier in the day, ended 1.4% lower. The 30-share DAX index dropped 20.52 to close at 1,493.82.
On London’s Stock Exchange, share prices also closed lower, depressed by economic uncertainty. The Financial Times 100-share index closed down 16.5 at 2,110.5.
CREDIT: Bond Prices Edge Up in Slow Trading Prices of government bonds rose slightly as investors marked time before a deadline for Congress to extend the government’s spending authority. Trading was sluggish.
The price of the Treasury’s key 30-year bond rose 5/32 point, or $1.56 per $1,000 in face amount. Its yield slipped to 8.77% from 8.79% late Tuesday.
The federal funds rate, the interest on overnight loans between banks, traded at 7.875%, up from 7.75% late Tuesday.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/16 point to 88-27/32
CURRENCY: Durables Data Adds to Dollar’s Troubles The dollar fell sharply in foreign currency trading amid continuing dismay over the health of the U.S. economy and lawmakers’ ongoing haggling over the federal budget.
A Commerce Department report showing a 1.7% decline in September orders for durable goods offered fresh evidence that the U.S. economy is weakening.
Investors also did not want to hold dollars because of the uncertainty over the the federal budget, even though there were indications that a compromise on a deficit-reduction bill could come soon.
In New York, the dollar fell to 1.506 German marks from 1.518 Tuesday. The dollar also fell further against the Japanese yen, closing at 126.49 yen, down from Tuesday’s 128.15.
COMMODITIES: Copper’s Advance Halted; Oil Rallies Copper futures prices fell sharply, ending a four-day run-up, and precious metals rallied as a bounce in oil prices rekindled worries about the economy.
Oil prices, which plummeted $13 a barrel recently from all-time highs, rebounded as the market sensed it may have been overly optimistic about a quick resolution to the Persian Gulf crisis. Spot crude oil for delivery in December closed up $1.71 at $31.08 a barrel on the New York Mercantile Exchange. Prices for gasoline and heating oil also rose.
Prices rose on news that Israeli warplanes had bombed a guerrilla base in Lebanon.
In other markets, orange juice futures surged; grains and soybeans were mixed, and livestock and meat futures were mixed.
Copper futures settled 1.4 to 3.5 cents lower on New York’s Commodity Exchange, with the contract for spot delivery at $1.29 a pound, down 3.2 cents.
Gold futures settled $2.10 to $2.30 higher on the Commodity Exchange, with the spot price at $373.50 an ounce; silver was 0.2 to 0.4 cent higher, with October at $4.22 an ounce.
