STOCKS : Dow Dips 7.92; Blurring Peace Prospects Cited
Stock prices were mixed Thursday as the bond market pulled back and oil prices rose.
The Dow Jones industrial index closed down 7.92 points at 2,614.36. Big Board volume was 162.11 million shares, down from Wednesday’s 182.27 million.
Advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 790 up, 747 down and 505 unchanged.
Investors found few incentives to bid up prices. “It has not been an inspiring day with the possible exception of Vista,” said Hugh Johnson, chief investment officer at First Albany Co.
Germany’s largest electricity utility, RWE AG, offered to pay $590 million, or $50 a share, for Vista Chemical in a friendly takeover. The bid sent Vista’s shares up 28 3/4 to close at 53 3/4.
Lingering uncertainty surrounding the Mideast pushed the market lower, with oil prices rising on Secretary of State James A. Baker III’s comment that Iraq does not appear to be serious about talks.
On the New York Mercantile Exchange, crude oil for January delivery rose $1.07 to close at $26.42 a barrel.
A rise in bond yields also depressed stocks. But David Holt, technical analyst at Wedbush Morgan Securities, said bonds were ripe for profit-taking, after a strong rally this month.
Among the market highlights:
* Some chemical stocks gained on word of the Vista bid. Quantum Chemical rose 3/4 to 15 1/8, Georgia Gulf added 7/8 to 8, Goodrich climbed 7/8 to 39 3/4, Great Lakes Chemical added 1 5/8 to 64 and Sterling Chemical rose 1/4 to 6 1/4.
* Auto stocks weakened anew, one day after GM and Ford issued gloomy assessments of 1991. GM fell 1 to 34 1/4 and Ford slipped 1/2 to 25 3/4. But Chrysler added 1/8 to 12 1/4.
* Deere jumped 2 1/8 to 47 5/8 on news of recently higher U.S. sales of farm equipment.
* Hilton Hotels, which jumped 6 5/8 Wednesday on speculation of a takeover, dropped 2 5/8 to 39 1/2 and traded as low as 37 1/2. The company said it knows of no offer, and analysts discounted the rumors. Meanwhile, casino firm Caesars World jumped 1 1/8 to 16 7/8. A 500,000-share block was traded at 15 1/2 early in the day. There was speculation that European investors were the buyers. The stock has been buffeted by takeover rumors of late.
* Security Pacific dropped 5/8 to 22. Merrill Lynch downgraded the stock to sell from neutral, citing expectations of more loan losses ahead. But First Interstate added 3/4 to 26 1/8. Some big investors in the bank are suggesting that it be sold.
* Among biotech firms, Genentech lost 3 1/4 to 24. Investors were disappointed with the company’s annual meeting, which forecast flat revenue. But Amgen gained 2 to 56 1/2 ahead of today’s FDA meeting that will review a key new Amgen drug. A competing drug from competitor Immunex got preliminary approval on Thursday. Immunex closed flat at 38 1/2, but the news came late.
In overseas trading, London stocks were boosted by a late afternoon buying binge by American investors. The Financial Times 100-share index closed up 15.3 points at 2,172.2.
In Germany, the 30-share DAX index slipped back from a confident start. The DAX ended just 0.56 points higher at 1,517.80.
In Tokyo, stocks staged a powerful rally on expectations of lower domestic and U.S. interest rates. The key Nikkei 225-share index soared 643.56 points to 24,642.97. But by midday today the Nikkei gave back 316.25 points.
CREDIT Bond Prices Slump on Retail Sales Data Higher oil prices and a stronger-than-expected retail sales report pushed bond prices down, but analysts weren’t chiseling an epitaph for the recent bond rally.
The Treasury’s bellwether 30-year bond dropped 1/2 point, or $5 per $1,000 in face amount. Its yield rose to 8.12% from 8.07% late Wednesday.
The bond market had rallied for three sessions following last Friday’s news of a jump in the nation’s unemployment rate to 5.9%.
On Thursday, the Commerce Department reported retail sales fell 0.1% in November, the first decline in six months. But when car sales were excluded, retail sales actually increased 0.2%.
But many economists believe the economy is weaker than the retail sales figures suggest.
The federal funds rate, the interest on overnight loans between banks, traded at 7.25%, up from 6.5% late Wednesday.
CURRENCY Dollar Edges Up in Slow Trading The dollar firmed slightly against major foreign currencies in sleepy pre-holiday trading.
In New York the dollar closed at 132.17 Japanese yen compared to 131.45 Wednesday. Against the German mark, the dollar closed at 1.479 compared to 1.475 on Wednesday.
COMMODITIES Grain and Soybean Futures Decline Grain and soybean futures prices fell on the Chicago Board of Trade as traders expressed disappointment with the $500 million to $1 billion in U.S. export credits given the Soviets. The market was expecting at least $1.5 billion in credits would be given to the Soviets.
Corn was 2 to 4 cents lower, with December at $2.23 a bushel; soybeans were 5 to 9.25 cents lower, with January at $5.88 a bushel.
Silver prices plunged to their lowest levels in 14 years on New York’s Commodity Exchange but recovered somewhat while still finishing lower. Silver futures finished 1 cent to 2.5 cents lower, with December at $4.00 an ounce.
Slowing industrial demand is affecting silver.
Gold prices rose, trading with oil. Gold was $1.60 to $1.90 higher, with December at $374.30 an ounce, as January crude oil leaped $1.07 a barrel to $26.42.
Market Roundup, D6
