Dow Gains 4.20, Unfazed by ‘Triple Witching Hour’
Stock prices drifted higher today amid strong cross-currents created by a quarterly “triple witching hour.”
The Dow Jones industrial average closed up 4.20 at 2,633.66, bringing its gain for the week to 39.85 points. Losses led gainers by an 8-7 margin.
New York Stock Exchange volume was unusually heavy at 233.40 million shares but the upturn in activity stemmed from the expiration at the close of the December stock index futures, futures options, index options and options on individual stocks, the so-called “triple witching hour.”
The witching hour, which falls on the third Friday of March, June, September and December, was often a turbulent occasion for the market in years past. But recently it has been taking place in more orderly style.
Trading was heavy at the outset as professional investors engaged in maneuvers involving a group of expiring options and futures on stock indexes.
Some of those contracts were settled on the basis of opening stock prices this morning, and others as of the close.
Beyond that specialized activity, analysts mostly saw an uneventful session, with many investors getting an early start on Christmas holidays.
“It’s kind of a nothing day,” said Thom Czech, head of the investment committee at Blunt Ellis & Loewi. “The internals of the market are not that strong, with declines still ahead of advances.”
The markets will be open Monday for an abbreviated session ending at 2 p.m. EST, instead of the usual 4 p.m. close.
Hugh Johnson, chief investment officer at First Albany Corp., said cyclical stocks that are sensitive to the state of the economy were performing better.
“That’s telling you the market is starting to feel a little more upbeat about 1991,” he said.
Merck & Co. rose 1 5/8 to 87 3/4 after the company said it has developed and started human clinical testing of its first compound for fighting the AIDS virus.
Desoto Inc., the maker of industrial products, said the steep drop in its share price reflected an $11.50 a share payment to shareholders. Desoto fell 11 1/4 to 8 1/8.
A Prudential-Bache analyst said she raised her rating on Intergraph Corp., the computer graphics company, to “buy” from “hold.” Intergraph added 1/2 to 14.
The Treasury’s bellwether 30-year bond was down 3/8 point, or $3.75 per $1,000 in face amount, around midday. Its yield, which rises when prices fall, was up to 8.26% from 8.23% late Thursday.
Earlier, the key long bond was up about 1/8 point, but economists said the subsequent decline was unrelated to external events and reflected the whims of a sparsely traded market. Prices remained relatively stable in narrow ranges.
