STOCKS : Market Takes Breather; Dow Declines 4.95
The stock market turned in a mixed showing Tuesday, as rising oil prices helped keep trading flat and halted a two-day rally.
The Dow Jones index of 30 industrials fell 4.95 at 2,535.40. But advancers outnumbered decliners by about 8 to 7 on the New York Stock Exchange, with 836 up, 731 down and 454 unchanged.
Big Board volume totaled 160.24 million shares, compared to 161.39 million Monday.
“We’ve had a nice 100-point run in the last two sessions,” said Michael Metz, analyst with Oppenheimer & Co. “I think we’re seeing a little profit taking.”
A rebound in oil prices Tuesday proved to be “a little bit of a deterrent,” said Jack Solomon of Bear, Stearns & Co. He said the market seemed to be “resting” in a session that showed no particular pattern.
Among the market highlights:
Financial stocks turned mixed, after powering the recent rally. BankAmerica lost 1/2 to 23 1/4 and Wells Fargo dipped 1/4 to 51 1/2, but American Express rose 7/8 to 22 1/2 and Downey Savings added 1/2 to 14.
Oil stocks fell broadly. Halliburton fell 2 to 45 3/4, Unocal lost 1 1/4 to 29 and Texaco dropped 1 to 57 7/8.
A strong earnings report helped boost Home Depot 7/8 to 33 5/8. But Live Entertainment plunged 3 1/2 to 10 3/8 on its earnings report. However, analysts said investors appeared to be overreacting to a slide in earnings that was skewed by a one-time item in the year-earlier quarter. Operating results were up 73%, even though the firm’s music distribution business is losing money.
Lockheed jumped but traded well below an offer made Monday by financier Harold Simmons to take the firm private at $40 a share. The stock rose 2 to 31 3/4.
Among other Southland stocks, Bridgford Foods added 1/4 to 17 3/4. It declared a 3-for-2 stock split. Trimedyne jumped 5/8 to 3 1/4 after receiving U.S. approval to market a medical laser.
In Tokyo, stocks closed sharply higher after Wall Street’s Monday rally and on stock index futures arbitrage-related buying. News of a bank merger fueled further gains. The 225-share Nikkei average surged 1,041.87, or 4.5%, to close at 23,973.67. Early today, the Nikkei slipped 107 points.
In London, shares fell back after a rally. The Financial Times 100-share index rose 4.1 to 2,056.
In Frankfurt, Germany, stocks closed just above Monday’s levels in moderate trading, disappointing dealers who had hoped that an early gain could be held in the session. The 30-share DAX index ended just 0.67 points higher at 1,402.91.
CREDIT Bond Prices Higher on Hopes of Rate Cut Bond prices advanced as traders positioned themselves for a possible lowering of interest rates by the Federal Reserve.
The 30-year Treasury bond rose 1 point, or $10 per $1,000 in face value. Its yield slumped to 8.53% from 8.62% late Friday.
Some of the rise came as bond traders caught up with gains overseas Monday, when U.S. markets were closed for Veterans Day.
Prices got another boost from weaker-than-expected economic data that raised hopes that the Fed would relax its monetary policy and push interest rates lower.
The Fed reported that industrial production tumbled 0.8% in October, the first decline since April. The Fed’s Open Market Committee met Tuesday in Washington, and analysts said the market was looking for the committee to approve a 1/4-point drop in the federal funds rate, the interest rate charged on overnight loans between banks.
But the day ended with no evidence of a change in Fed policy. The fed funds rate closed at 7.75%, up from 7.56% late Friday.
The Fed is under pressure to lower rates as a means of stimulating the weakening economy.
CURRENCY Dollar Turns in Mixed Performance The dollar registered a spotty performance in quiet trading.
Traders said the dollar rose against the Japanese yen amid indications of cracks in Japan’s economy, with several bankruptcies announced last week combining with higher interest rates to discourage investment in the yen.
The dollar rose to 129.65 yen in New York, up from Monday’s 128.30. Against the German mark, the dollar inched up to 1.478 from 1.477 Monday.
Also in New York, the British pound also weakened, to $1.9635 from $1.9660 late Monday. But in earlier London trading, sterling cost $1.9640, more expensive than late Monday’s $1.9627.
Other late dollar rates in New York, compared to late rates Monday, included: 1.2510 Swiss francs, up from 1.2468; 4.9735 French francs, up from 4.9700; 1,112.00 Italian lire, down from 1,113.00; 1.1662 Canadian dollars, down from 1.1664.
COMMODITIES Harvest, Weather Hurt Soybean Prices Soybean futures prices plunged to new near-term contract lows on the Chicago Board of Trade, weighed heavily by a lack of export demand and good harvesting conditions.
Elsewhere, the December contract for light, sweet crude oil rebounded $1.25 to $33.12 a barrel on the New York Mercantile Exchange, as traders continued to churn the oil markets. There was no dramatic news from the Mideast.
Soybeans futures settled 10 3/4 to 3 3/4 cents lower, with the contract for delivery in November at $5.63 a bushel. Soybeans attempted an early morning rally, but slid to double-digit losses on slack demand and expectations of a huge harvest ahead.
Market Roundup, D6
