STOCKS : Dow Off 8.66; Issues Mixed in Erratic Trading
Stocks showed little change Wednesday in a choppy session. Small issues once again led the way, while blue chips lagged.
The Dow Jones index of 30 industrials fell near the close to finish 8.66 points lower at 2,535.15, after trading slightly higher through much of the day.
Despite the Dow’s loss, advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, with 843 up, 664 down and 496 unchanged. Big Board volume totaled 145.49 million shares, against Tuesday’s 147.59 million.
With no substantial developments in the Persian Gulf and mixed economic reports, shares traded in a tight range. “Some of the buying could be people picking up bargains at the end of the year,” said Richard Meyer, trader at Ladenburg Thalmann.
That was apparent in the over-the-counter market, where the NASDAQ composite index gained 1.01 points to 355.06, or 0.3%, continuing Tuesday’s healthy rise.
Analysts said the market seemed largely to ignore comments by Federal Reserve Chairman Alan Greenspan that there was a “meaningful downturn” in economic output in October and early November. Though Greenspan disappointed some by failing to promise a further cut in interest rates, Wall Street largely looked past it.
A lower-than-expected revised third-quarter gross national product growth figure of 1.7% and a surprisingly strong 3.6% gain in October durable goods orders, driven by demand for automobiles and aircraft offered a mixed picture of the economy.
Among the market highlights:
* Investors continued to cherry-pick various sectors for what they viewed as bargains. Among retailers, Circuit City gained 7/8 to 12 1/2, Lowe’s Cos. rose 1 1/4 to 20 1/2 and Vons added 3/4 to 19 7/8.
In the health-care area, Johnson & Johnson rose 1 3/8 to 67. Cowen & Co. lifted its rating on the stock to “buy,” citing good prospects for several of its new high-margin drug products. Other medical gainers included U.S. Healthcare, up 7/8 to 23 3/4, Tokos Medical, up 1 1/2 to 11 1/2, and Trimedyne, up 1/4 to 3.
* Insurance stocks rose again on increasing hopes that lower interest rates will help the companies prosper despite weakened investment portfolios. General Re rose 1 5/8 to 90; Marsh & McClennan gained 1 5/8 to 74 5/8 and Geico jumped 3 7/8 to 163.
L.A.-based insurer Broad Inc. soared 5/8 to 4 1/2, a 16% rise, on volume of 504,500 shares, heaviest this year.
* Some technology issues continued to attract buyers. Among Southland tech issues, Advanced Logic jumped 3/4 to 8 1/2 and Applied Magnetics gained 3/4 to 9 1/2. But Archive Corp. tumbled 3/4 to 4 7/8 and Brajdas slumped 7/8 to 2.
* Delta Air Lines fell 2 3/4 to 53 3/8 as brokerage First Boston cut earnings projections for the carrier. AMR fell 1 1/2 to 43 3/4 and UAL lost 1/4 to 94 7/8 in sympathy.
* Woodland Hills-based New Image Industries lost 1/4 to 2. A shareholder sued, charging that the company earlier this year issued misleading optimistic statements about the stock, which has fallen from 16. The company had no comment.
* Laguna Niguel-based Furon dropped 1 1/2 to 8 3/4 after the plastics firm reported quarterly earnings of 26 cents a share, down from 32 cents a year earlier.
* Dun & Bradstreet lost 2 1/8 to 38 1/4. The company said it is no longer seeking buyers for two of its information units because of current market conditions.
In London, share prices fell in a subdued session. At the close, the Financial Times Stock Exchange 100-share index was down 15.2 points at 2,144.3.
German shares ended an erratic session slightly firmer. They slipped at the opening but then raced higher on hopes of dialogue between the United States and Iraq over the gulf crisis. The 30-share DAX index finished up 5.36 points at 1,420.62.
Prices on the Tokyo Stock Exchange closed sharply lower in thin trading on active selling by margin traders before a trading deadline. The benchmark Nikkei 225-share average plunged 569.63 points, or 2.4%, to 23,053.88. In mid-morning trading today, the Nikkei was off another 673 points, or 2.9%, to 22,380.40
CREDIT: Bond Prices Fall on Fed Chief’s Remarks
Bond prices slipped on Fed Chairman Greenspan’s comments to the House Banking Committee that the economy was ailing. Traders noted that Greenspan didn’t indicate plans for a major interest rate drop, despite his pessimism.
The Treasury’s bellwether 30-year bond fell 3/16 point, or $1.88 per $1,000 in face amount. Its yield rose to 8.44% from 8.43% Tuesday.
The bond market had tumbled early after the government announced a stronger-than-expected rise in durable goods orders in October. But the Commerce Department’s downward revision of the July-to-September gross national product figures was a positive for bonds.
Greenspan’s comments weren’t surprising, and some traders had hoped he would signal that the Fed was ready to ease credit again. But he made no such reference.
The federal funds rate, the rate on overnight loans among banks, was quoted late Wednesday at 4%, down from 7.375% Tuesday. The rate often fluctuates wildly on Wednesdays, when banks must report their reserves to federal authorities.
CURRENCY: Dollar Boosted by Greenspan’s Views
The dollar rose, taking a hint from Fed chief Greenspan that no further cut in interest rates is in the wings.
The dollar--like all currencies--is supported by higher interest rates. When yields are up in this country, U.S. investments become more attractive to foreigners who then buy dollars to purchase the securities.
In New York, the dollar closed at 1.486 German marks and 130.10 Japanese yen, up from 1.480 marks and 128.35 yen at Tuesday’s close.
The British pound dropped back to $1.969 in New York from late Tuesday’s $1.977. The pound had surged Tuesday on news of John Major’s election as prime minister.
COMMODITIES: Grain Prices Up on Hopes of Soviet Deal
Grain and soybean futures prices rose on the Chicago Board of Trade amid speculation the Soviet Union will use money borrowed from Saudi Arabia to buy U.S. grain.
Grain markets also were supported by a report that President Bush would “take under advisement” the issue of food export credits to the Soviets, although some analysts viewed the situation skeptically.
Meanwhile, oil prices rose on expectations that the United Nations will adopt a resolution to force Iraq out of Kuwait if necessary.
Crude oil for January delivery rose 42 cents to close at $33.28 a barrel.
On New York’s Commodity Exchange, gold futures finished 10 to 30 cents lower, with December at $385.70 an ounce; silver was 2.3 to 3.8 cents higher, with December at $4.12 an ounce.
