STOCKS : Dow Inches Up 2.97, Ending Two-Day Slide
After a jittery day of Mideast war rumors and worries over a huge Treasury bond auction, stocks eked out small gains Thursday, ending a two-day losing streak.
The Dow Jones index of 30 industrials edged up 2.97 to 2,443.81 after falling 44.31 points Wednesday. In the broader market, advancing issues outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 834 up, 654 down and 510 unchanged.
Big Board volume came to 155.57 million shares, up from 149.13 million Wednesday.
Continued hopes for a new wave of interest-rate cuts by the Federal Reserve lured some buyers, as did a decent reception for the 30-year Treasury bond auction--which underscored the hopes for lower rates. A late rally in the rumor-roiled oil market failed to rout stock traders.
But concern over the economy and the Mideast crisis continued to weigh on the market, while the repeated delay of a news conference by President Bush further ate into confidence.
“There were concerns about and rumors of a war in the Mideast,” said Kenneth Spence, technical analyst at Salomon Bros.
Shortly before the close, defense officials denied a rumor that a U.S. plane had been shot down in the Persian Gulf region. However, Bush, who finally spoke to reporters after the close of trading, said more troops would be sent to the Middle East to ensure the nation’s offensive capability.
Among the market highlights:
* NCR jumped 5 7/8 to 53 7/8 on speculation that it and AT&T; may be exploring the possibility of merging their computer businesses. AT&T; fell 1/2 to 33 1/8, but other tech stocks were buoyed, including IBM, up 1 to 107 1/2, and Compaq, up 1 3/8 to 47 3/4.
* SmithKline Beecham tumbled 4 1/2 to 53 3/8 after it reported third-quarter results. Analysts said investors were disappointed with the 4% growth in sales. Bear, Stearns & Co. removed its recommendation from the stock.
* Two waste-disposal companies that fell sharply during the past two days rebounded. Browning-Ferris rose 5/8 to 22 3/8 and Waste Management gained 3/4 to 32 1/4. The stocks had been hammered on a weak Browning earnings report.
* Shearson Lehman downgraded ratings and cut estimates on Alcoa and Reynolds Metals. Alcoa dropped 1 1/4 to 50 1/2 and Reynolds fell 2 1/4 to 49.
* Cisco Systems rose 3 7/8 to 33 7/8 after the computer networking firm reported better-than-expected earnings.
* Among Southland stocks, good earnings reports lifted Vons supermarkets 1/4 to 18 1/4 and Jacobs Engineering 1/4 to 21. But computer maker Teradata slumped 3/4 to 7 1/4 after announcing new cutbacks to deal with falling orders. Elsewhere, Telecredit gained 1 1/2 to 36 1/2 on word that it is renegotiating merger terms with Equifax. Western Digital lost 5/8 to 4 5/8, but there was no news.
Tokyo stocks were knocked down in volatile trading on expectations of war in the Mideast after bellicose comments by British Prime Minister Margaret Thatcher. The key 225-share Nikkei index closed down 530.44, or 2.3%, to 22,969.81. The decline continued today, as the Nikkei fell another 346.23 by midday.
Share prices closed lower on London’s Stock Exchange, as investors found little inspiration from Chancellor of the Exchequer John Major’s autumn statement on public spending. The Financial Times 100-share index closed down 23 points, or 1.1%, at 2,036.2.
German share prices recovered to close only slightly below the previous close, after dropping sharply in early trading. The DAX index rose 1.71 points to 1,369.44.
CREDIT: Auction a Success, but Bond Prices Dip
Government bond prices slipped slightly despite a successful conclusion to the Treasury’s quarterly refunding auction. Observers blamed the slump on President Bush’s harsher words about the Persian Gulf stalemate.
The price of the government’s bellwether 30-year bond fell 3/16 point, or about $1.88 per $1,000 in face value. Its yield advanced to 8.7% from 8.69% late Wednesday.
The $10.75 billion in new 30-year bonds sold yielded an average 8.71%, down from 8.87% at the last auction Aug. 9. James Marshall, a bond trader with Clayton Brown & Associates, said the yield was “pretty much as advertised,” indicating demand for the bonds was adequate.
Wednesday, the government sold 10-year notes at an average yield of 8.52%.
The federal funds rate, the interest on overnight loans between banks, traded at 7.625%.
CURRENCY: Dollar Up Sharply Against Yen, Mark
The dollar ended sharply higher against most other major currencies as worries about war in the Persian Gulf shook the market.
“Rumors were flying around about conflict in the Gulf. The unrest does nothing but help support the dollar,” said Jack Griffin, a dealer at Banque Indosuez.
In New York, the dollar finished at 130.35 Japanese yen, against Wednesday’s 128.73. The dollar rose to 1.493 German marks, up from 1.487.
The Japanese yen suffers most from concerns about war, Griffin said, because Japan is seen as being most vulnerable to a cutoff of oil.
COMMODITIES: Growth in Soybean Crop Shocks Traders
Analysts predicted a sharp drop in soybean futures prices after the government shocked the experts Thursday with an unprecedented 4.4% increase in its 1990 U.S. soybean crop estimate.
“It’s a killer,” said analyst Doug Jackson of Farmers Commodities Corp. in Des Moines, Iowa. He said soybean prices probably would open 10 cents a bushel lower Friday in reaction to the report. The November contract closed at $5.83 a bushel on the Chicago Board of Trade.
The new soybean estimate represented the largest October-to-November increase ever in the USDA’s harvest projections.
Elsewhere, on the New York Mercantile Exchange, light sweet crude oil settled 50 cents to $1.28 higher in a late rally sparked by rumors of imminent U.S. action in the Gulf. The December contract gained 22 cents to $35.53 a barrel.
In Moscow, Soviet Foreign Minister Eduard Shevardnadze joined a growing number of world leaders in proclaiming military force may be necessary to oust Iraq from Kuwait.
On New York’s Commodity Exchange, gold futures settled 70 cents to $1 higher, with November at $387.30 an ounce; silver was 0.9 cent to 1 cent lower, with December at $4.27 an ounce.
