STOCKS : Blue Chips Defy Market Trend; Dow Rises 17.82
Boosted by late buying, blue chip stocks closed higher Tuesday after a roller-coaster session again dominated by worries about the economy and the Middle East.
The Dow Jones industrial index closed up 17.82 at 2,448.02. For most of the session, the 30-share Dow zigzagged in a wide range, down as much as 21 points and rising as much as 19 points.
Despite the Dow’s rise, declining issues outpaced advancers by a margin of about 8 to 7 in nationwide trading of New York Stock Exchange-listed stocks, with 685 up, 817 down and 471 unchanged. Big Board volume rose to 153.45 million shares from 133.98 million in the previous session.
The Standard & Poor’s 500 index rose 0.7%, but the NASDAQ over-the-counter composite slid 0.3%.
Volatile trading began early as stocks rose on news of the economy’s surprisingly strong 1.8% annualized growth rate in the third quarter. But gains were soon wiped out as investors realized that the figure did not signify the economy was recovering.
“I think that (rise) might well represent the economy’s last hurrah before a recession in the fourth quarter,” said Argus Research analyst A. C. Moore.
Analysts said Mideast tension also continued to depress stocks. As has happened often in recent weeks, the White House denied rumors that shooting broke out.
Among the market highlights:
* Utility stocks were standouts, as the Dow utility index jumped 2.57, or 1.2%, to 201.95. The index was paced by Con Ed, up 5/8 to 22 7/8; Detroit Edison, up 3/4 to 29 1/4, and Consolidated Natural Gas, up 1 1/4 to 49 1/4. Many analysts say the utilities’ recent strength suggests that interest rates are peaking, because the firms have historically foreshadowed a drop in rates.
* The Dow industrial index’s strength was concentrated in 3M Co., up 1 5/8 to 79 1/2; GE, up 1 7/8 to 52 3/4, and Procter & Gamble, up 1 3/8 to 79. Those gains offset Boeing’s drop of 1 5/8 to 44 1/2. Traders said Salomon Bros. downgraded its rating on Boeing.
* Ford Motor fell 2 to 27 5/8. Prudential-Bache downgraded the stock after Ford reported disappointing third-quarter results.
* It was another bad day for S&L; stocks, as many hit new 52-week lows. Citadel fell 1 1/4 to 21 7/8, Coast dropped 3/8 to 2 3/8, Glenfed gave up 3/8 to 5 1/2 and Great Western lost 3/8 to 8 3/4.
* Many high-tech stocks rebounded, though some of that was short-covering by traders who had correctly bet on the stocks’ recent declines. El Segundo-based Computer Sciences gained 1 3/8 to 42 1/8. Merrill Lynch reiterated a buy recommendation, citing a surge in orders from the government and the prospect of further big orders.
* Genetics Institute’s shares were off 2 1/2 to 34 1/8. The company said one of its products will not be reviewed by a Food and Drug Administration advisory committee meeting.
* Neiman-Marcus jumped 3 3/8 to 14 5/8. General Cinema offered to acquire all the shares it does not already own for $14.40 each. General Cinema added 1/4 to 19 3/8.
Tokyo stocks closed lower in a day of skittish trading. The key 225-share Nikkei index lost 86.91 to close at 25,242.40.
In London, traders blamed fears of war in the Mideast and disappointing economic reports for a drop in prices. The broad-based Financial Times 100-share index fell 28.2 to 2,033.9.
German share prices closed at the day’s low, hurt by recent talk of poor corporate earnings. The DAX index fell 23.35, or 1.6%, to 1,431.14.
CREDIT Bond Prices Get Lift as Oil Drops Bonds rose, strengthened by news of a small easing in oil prices and a better-than-expected auction of new U.S. Treasury notes.
The Treasury’s benchmark 30-year bond rose 5/32 point, or $1.56 per $1,000 in face amount. Its yield eased to 8.81% from 8.83% late Monday.
Economists said the credit markets responded favorably as oil prices stabilized. A continuing rise in oil would translate into higher inflation, which would devastate bonds and drive rates up.
Traders said they also were encouraged by Tuesday’s strong auction of two-year T-notes, which resulted in yields falling to their lowest level since last December. The average yield was 7.84%.
The federal funds rate, the interest on overnight loans between banks, was quoted at 7.688%, down from 7.913% late Monday.
CURRENCY GNP Report Helps the Dollar Overseas The dollar finished higher in Europe after a better-than-expected report on the U.S. economy, but the advance ran out of steam in New York.
The stronger the economy, the less inclined the Federal Reserve will be to lower interest rates. So the dollar was viewed more favorably by foreign buyers who expect U.S. rates to stay up.
But when it became clear that the dollar would not push above its recent trading levels, dealers took their profits, and that sent the dollar falling against most major currencies.
In New York, the dollar closed at 1.514 German marks, down from Monday’s 1.522. It rose slightly to 128.73 Japanese yen from 128.65 Monday.
COMMODITIES Platinum Recovers; Gold, Silver Shine Prices of platinum futures posted their strongest gains in 10 months Tuesday, rebounding from depressed levels after a government report indicated that the U.S. economy had a stronger third quarter than most economists thought.
Gold and silver futures turned in their best performances in more than a month, even as oil slipped.
On other commodity markets, grains and soybeans were mostly higher, and livestock and meat futures were mixed.
Platinum futures settled $18.40 to $18.70 higher on the New York Mercantile Exchange, with the contract for delivery in January up $18.70 at $437 an ounce.
It was platinum’s strongest day since Jan. 4, when the near-term contract surged $18.90 an ounce.
Tuesday’s rally marked a significant recovery for platinum, which traded at a 4 1/2-year low of $387.50 on Oct. 16 amid fears that the economy was sliding into a recession.
The platinum market is sensitive to economic signals because the metal has many industrial uses. Thirty-seven percent of the platinum consumed last year went into automobile pollution-control systems, and 17% was used in petroleum, glass, electrical and chemical manufacturing.
Gold futures settled $5.60 to $6 higher on New York’s Commodity Exchange, with the November contract at $379.70 an ounce; silver was 8.8 to 9.3 cents higher, with December at $4.25 an ounce.
Crude oil futures ended lower, and heating oil and gasoline futures were mixed on the New York Mercantile Exchange amid conflicting factors. Light sweet crude oil futures settled 8 to 36 cents lower, with December at $34.54 a barrel.
Market Roundup, D6
