STOCKS : Dow Up 15.10 Despite Oil and Bond Reports
Investors pushed stocks higher Monday, shrugging off a rise in oil prices and interest rates.
The Dow Jones index of 30 industrials, up 61.64 points last week, rose 15.10 to 2,565.35.
On the New York Stock Exchange, advancing issues outnumbered declines by nearly 3 to 2, with 902 up, 624 down and 475 unchanged. Broader stock indexes mostly outpaced the Dow. The Standard & Poor’s 500 index rose 2.22 points to 319.34.
But volume slowed sharply, as many traders already were off for the Thanksgiving holiday. NYSE trading fell to 140.95 million shares from Friday’s 165.44 million.
Iraq sent mixed signals over its intentions in the Persian Gulf, first offering to free all hostages between Christmas and April, and then saying it would send 250,000 more troops to Kuwait.
Alfred Goldman, director of technical research at A. G. Edwards, said the buyers in the market Monday were apparently ignoring Iraq and focusing instead on the Federal Reserve’s recent moves to ease credit.
“The key development is that the Fed made a recession official by cutting rates. By making it official, the market can start discounting the end of a recession,” Goldman said.
On Friday, the Fed signaled a quarter-point drop to 7.5% in the key federal funds rate, which banks charge each other on overnight loans. Even so, the bond market still lost ground Monday as oil prices gained.
Among the market highlights:
* Technology stocks led an otherwise mostly trendless market. IBM added 1 1/8 to 114 3/4, Conner Peripherals jumped 1 1/4 to 25 1/2, AST Research leaped 1 3/8 to 26 5/8 and Microsoft gained 1 1/2 to 69 1/2.
Biotech also was an area of strength. Amgen rose 2 3/4 to 55 1/2, Genetics Institute added 2 1/4 to 37 3/4 and Immunex jumped 3 1/4 to 32 1/4.
* Entertainment stocks rose, resuming a recent rally. MCA added 2 3/8 to 67 1/4 on news of a meeting between Matsushita and MCA officials in New York to discuss the possible merger of the two companies. Disney jumped 4 1/8 to 99 1/4 on recurring rumors that it may buy NBC. Elsewhere, Orion Pictures rose 7/8 to 12 1/2 and Time Warner added 1 to 80 5/8.
But CBS fell 4 to 159 3/4 after it forecast a fourth-quarter loss and a decline in 1991 full-year earnings.
* Insurer USF&G; dropped 2 3/8 to 7 3/4 on concerns about the company’s deteriorating assets. Among other financial stocks, Broad Inc. added 1/4 to 4 on an encouraging earnings report. Glenfed dropped 5/8 to 6 5/8 after its debt rating was downgraded.
In Tokyo, lower oil prices, strength in the bond market and a growing consensus that war in the Middle East is not imminent all helped to push stock prices higher. The 225-share Nikkei average closed 346.53 points or 1.5% higher at 23,518.16. At midday today, the Nikkei was off 198 points.
Share prices jumped almost 3% in Frankfurt as fears of war in the Gulf lessened. The German market closed before Iraq announced it was sending more troops to Kuwait. Lower oil prices and rising bond prices also had a positive impact. The 30-share DAX index ended 41.79 points up at 1,467.47.
Share prices also closed higher in London. The Financial Times 100-share index closed up 27.9 points, or 1.3%, at 2,095.0.
CREDIT Bond Prices Plunge on Inflation Fears Bond prices fell sharply in thin trading Monday, as new fears of accelerated inflation prompted a selling spree that nearly wiped out Friday’s rally.
The Treasury’s key 30-year bond fell 11/16 point, or $6.88 per $1,000 in face amount. Its yield rose to 8.51% from 8.45% Friday.
Discouraging economic news convinced traders to sell off their holdings from Friday. Triggered by the early-day report that Iraq was more than doubling its troop strength in occupied Kuwait, oil prices jumped $1.75 a barrel to $31.50 for the December contract of light sweet crude.
Traders took this sign of heightened inflation as an opportunity to cash in their bond purchases from Friday, when the Federal Reserve moved to ease interest rates.
The federal funds rate, the interest on overnight loans between banks, traded at 7.563%, unchanged from Friday.
COMMODITIES Cattle Futures Hit a Record High Record-high cash prices for cattle prodded the futures market upward at the Chicago Mercantile Exchange.
Cash cattle reached a record 82.50 cents a pound at Kansas City and there was talk that buyers were paying 83 cents at some markets, said Charlie Richardson of Lind-Waldock & Co. in Denver.
While cattle futures followed an upward trend, they were somewhat restrained by fears that cash prices might be too high and by uncertainty generated by the government’s seven-state cattle-on-feed report, released after the close.
That report showed the number of cattle on feed as of Nov. 1--8.74 million head--at the high end of what the market was expecting.
Live cattle futures settled 0.08 to 0.38 cent higher, with the contract for delivery in December at 79.32 cents a pound; feeder cattle were 0.10 to 0.40 cent higher, with January at 87.80 cents a pound.
CURRENCY Iraq Troop Story Brings Dollar Back The dollar traded mostly lower, but it was boosted above its lows of the day by the news that Iraq was moving more troops to Kuwait.
The dollar had started mixed against major currencies in European trading. Traders said it was hurt by the Federal Reserve’s decision Friday to ease interest rates, which tends to make the dollar less valuable in relation to other currencies.
That downward pressure on the dollar continued when domestic markets opened, until Mideast worries were fanned anew.
In New York, the dollar traded at 1.471 German marks, up from 1.470 late Friday, which was a post-war low for the dollar against the mark.
Against the Japanese yen, the dollar traded at 128.75, down from 129.50 Friday.
Other late dollar rates in New York included: 1.2450 Swiss francs, down from 1.2465; 4.9645 French francs, down from 4.9685, and 1.1634 Canadian dollars, up from 1.1633.
Market Roundup, D6
