STOCKS : Dow Adds 5.94 on Hopes for Peace in Gulf
Stocks rose moderately Monday, bolstered by optimism about a peaceful solution to the Iraq crisis and by a major takeover bid.
The Dow Jones industrial index, which rose 40.84 points on Friday, added 5.94 to close at 2,565.59. The Dow’s rise was held back by AT&T;’s loss of 2 to 30 1/8, on word of its takeover bid for NCR Corp.
In the broader market, advancing issues outnumbered declines by about 3 to 2 in trading of New York Stock Exchange-listed stocks, with 964 up, 612 down and 444 unchanged. Most broad-market indexes advanced about 0.5% for the day, with over-the-counter stocks registering sharper gains.
Big Board volume slipped to 177.01 million shares from Friday’s 192.35 million.
Overtures of peace in the Persian Gulf, which sent oil prices plunging and boosted stocks Friday, continued to provide support on Wall Street on Monday. Oil prices were mixed, with the January crude contract on the New York Mercantile Exchange rising 30 cents to $29.15 a barrel.
During the weekend, Baghdad signaled that it would accept President Bush’s offer for direct talks.
News that AT&T; made an unsolicited stock-swap bid worth $90 a share, or $6 billion, for NCR helped the overall market. Such large acquisition bids have become rare in the past year as financing has dried up.
“The (AT&T;) bid indicates there may be a lot more liquidity than many think,” said Alan Newman, a technical analyst at H. D. Brous & Co. “If there’s still enough liquidity for deals like this and MCA/Matsushita, that’s good news.”
Last week MCA Inc. agreed to be taken over by Matsushita in a $6.59-billion deal.
News of the AT&T; bid “underscores the fact that a lot of companies are still pretty cheap,” argues analyst John Brooks of Davis, Mendel & Regenstein.
Among the market highlights:
* NCR rocketed 24 3/4 to 81 1/2 on news of the $90 AT&T; bid. The wide price spread suggested that Wall Street was wary of the deal. Other tech stocks were mostly higher on the news, and on optimism about computer sales despite the weak economy. (Story, D2.) AT&T; lost 2 to 30 1/8 on worries that it may be overpaying for NCR.
* Airline stocks rose on expectations that they might benefit from the decision of Continental Airlines to file for Chapter 11 bankruptcy protection. AMR, parent of American Airlines, rose 1 1/4 to 48 1/2. UAL, parent of United, jumped 1 7/8 to 99 3/8. Also, Delta rose 1 3/4 to 58 1/2, Southwest rocketed 1 3/8 to 18 7/8 and USAir inched up 3/8 to 14 1/4.
* Some retailing stocks gained after a Goldman Sachs analyst made favorable comments. Limited rose 1 1/2 to 17 1/4, Gap added 1 3/8 to 33 and Wal-Mart rose 3/4 to 30 7/8. Also, Kmart rose 1 3/8 to 28 and Home Depot jumped 2 to 37 3/4.
* Some home builders’ stocks rallied. Kaufman & Broad rose 1 to 8 and Centex added 1 1/8 to 24 3/4.
In Germany, share prices rose strongly on the back of Chancellor Helmut Kohl’s election victory and on improved prospects for peace in the Persian Gulf. The 30-share DAX index ended 21.35 points higher at 1,462.58.
Stocks finished higher after a calm session on London’s Stock Exchange. The Financial Times-Stock Exchange 100-share index closed up 13.3 at 2,162.7.
In Tokyo, stocks closed higher but well off their highs after early optimism over the Middle East crisis faded. The 225-share Nikkei average ended up 271.36 points at 22,725.99. At midday today, the Nikkei was off 580.67 at 22,145.32.
CREDIT Momentum Carries Bond Prices Higher Bond prices were up moderately in a lightly traded market energized by lingering momentum from Friday’s sharp advance.
The Treasury’s bellwether 30-year bond was up 11/32 point, or $3.44 per $1,000 in face amount. Its yield eased to 8.36% from 8.39% late Friday.
Credit market participants said it was a day of quiet reflection and profit taking for traders who aggressively bought bonds and notes Friday. Bonds settled at prices close to early-day highs built on the heated overseas activity that followed President Bush’s diplomatic initiative to Iraq and the subsequent plunge in oil prices.
The federal funds rate, the interest on overnight loans between banks, traded at 7.438%, down from 7.50% late Friday.
CURRENCY Traders’ Wariness of Talks Bolsters Dollar The dollar rose against major foreign currencies as the prospect of direct talks between Iraq and the United States failed to convince traders that a war in the Persian Gulf will be avoided.
In New York, the dollar bought 1.513 German marks late Monday, compared to 1.502 Friday. It soared against the Japanese yen to 134.73 from 132.50 Friday.
Many traders don’t believe that talks between the United States and Iraq will head off a war, the risk of which has pushed the dollar higher because of its status as a safe haven.
COMMODITIES High Demand Seen; Soybean Prices Soar Prices of soybean futures bounded to five-week highs Monday on the Chicago Board of Trade in a late rally fueled by signs of tight supplies and prospects for stronger export demand. Most grain futures also advanced.
Soybean futures settled 4.25 to 11.75 cents higher in Chicago, with the contract for delivery in January at $6.01 a bushel, the first daily close above $6 for a near-term contract since Oct. 25.
Wheat finished 1.50 to 2.50 cents higher, with December at $2.48 a bushel; corn was 0.25 cent lower to 2.50 cents higher, with December at $2.30 a bushel.
The surge began in the soybean oil pit after a large number of oil delivery notices were canceled, indicating that soybean oil supplies for delivery against the December contract may be tighter than previously thought.
Steve Freed, grains analyst with Dean Witter Reynolds, said soybeans also were boosted by reports that Germany is considering selling at least some of its excess soybean crushing capacity to the Soviet Union.
Elsewhere, near-term oil futures gained 30 cents to $29.15 a barrel on the New York Mercantile Exchange, following Friday’s rout. Gold futures fell sharply on New York’s Commodity Exchange as the dollar rose. The dollar competes with gold for safe-haven money. Gold settled $6.70 to $7.70 lower, with December at $376.60 an ounce.
Silver, however, was 1 cent to 1.6 cents higher, with December at $4.14 an ounce.
Market Roundup, D10
