STOCKS : Dow Declines 11.63 as Fire Cuts Trading
Stocks fell in a late selloff Thursday, and bonds rose after another report confirmed weakness in the economy.
The Dow Jones industrial index fell 11.63 points to close at 2,625.50. Losing issues outpaced winners by a 3-2 margin.
The opening of trading was delayed 90 minutes by an overnight fire in the financial district, and only 102.90 million shares changed hands in the shortened New York Stock Exchange session.
It was still the busiest day of the holiday week.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 128.88 million shares.
Once activity got going, analysts said it was hard to discern any clear-cut shifts in mood among investors, even though interest rates fell in the credit markets.
Often at this time of year there is excitement about the so-called January effect--a historical tendency for stocks in general, and smaller issues in particular, to rally once the pressure of December tax selling is lifted from the market.
But interest in such phenomena apparently has been muted this winter by uncertainty over the Middle East.
Stock prices were hurt by President Bush’s vow that there would be “no compromise” in the standoff with Iraqi President Saddam Hussein.
The Jan. 15 U.N. deadline for Iraq to withdraw from Kuwait “is hanging over our heads,” said Peter Davies, vice president at Nomura Securities.
The government reported that orders for durable goods fell 10.5% last month, a drop three times higher than the average forecast of a 3.1% drop.
The news undercut the stock market but boosted bonds because it signaled the possibility of lower interest rates.
Among the market highlights:
Losers among the blue chips included American Telephone & Telegraph, down 1/8 at 30 1/8; General Electric, down 1/8 at 57 1/4; Exxon, down 1/2 at 51 1/4, and General Motors, down 3/8 at 34 3/8.
* Tiffany & Co. fell 2 1/4 to 35 on top of a 4 3/8-point loss Wednesday, when the company said its holiday sales in the United States came in below expectations.
* Bank stocks were also weak. J. P. Morgan dropped 2 to 44, BankAmerica 3/4 to 26 1/2, First Chicago 1 1/4 to 16 1/2, Citicorp 1/4 to 13, Chase Manhattan 1/2 to 10 1/8 and Manufacturers Hanover 3/8 to 22 3/4.
Most overseas stock markets also were relatively quiet.
In Tokyo, the 225-share Nikkei average gained 53.14 points to close at 23,940.70.
In London, the Financial Times-Stock Exchange 100 index rose 11.5 points to 2,167.8.
Share prices in Frankfurt, Germany, closed mixed to slightly lower in what was described as exceptionally thin business. The 30-share DAX index fell 4.01 points from last Friday’s close to 1,410.87.
CREDIT
Bond Prices Inch Up on Hopes of Fed Easing
Bond prices were moderately higher in extremely light holiday trading.
The Treasury’s bellwether 30-year bond rose 15/32 point, or $4.69 per $1,000 in face amount. Its yield, which falls when prices drop, was down to 8.24% from 8.28% late Wednesday.
Analysts said the bad economic news raised hopes that the Fed would move to ease interest rates, a step that generally increases the value of government securities.
Traders said a Treasury auction of four-year notes did not seem to have a big effect on prices in the secondary market.
In the auction, yields on four-year notes fell to the lowest level in a year. The average yield was 7.66%, down from 8.53% at the last auction Sept. 26. It was the lowest rate since four-year notes averaged 7.65% on Dec. 20, 1989.
A total of $8.57 billion in notes were sold out of bids totaling $22.5 billion.
In the secondary market for Treasury bonds, short-term maturities rose 1/16 point to 1/4 point, intermediate maturities gained 5/32 point to 9/32 point and long-term issues were up 5/32 point to 15/32 point, the Telerate Inc. financial information service reported.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
CURRENCY
Dollar Closes Lower in Slow Trading Day
The dollar settled mostly lower in extremely thin trading.
The government’s durable goods report influenced trading. The larger-than-expected drop fueled concerns that the economic downturn is deepening.
European markets, which had closed for the Christmas holidays, reopened to find traders mostly selling the dollar.
The German mark was boosted by the confirmation of Gennady I. Yanayev as Soviet vice president. He was Mikhail S. Gorbachev’s choice for the newly created office, and the approval appeared to signal a bit of stability in the politically torn Soviet Union. The dollar closed in New York at 1.5255 marks, down from 1.5348.
In Tokyo, the dollar closed at 136.65 Japanese yen, up 0.40 yen from Wednesday’s close. Later in London, it was quoted higher at 136.75 yen.
The British pound cost $1.8895, more expensive than Wednesday’s $1.8815.
COMMODITIES
Stock, Grain, Gold, Oil Futures Decline
Livestock and grain prices fell sharply as concerns about cold weather and snow faded.
Gold prices also were mostly lower.
Crop prices, which rose Wednesday on forecasts of a winter storm, fell back as investors decided that their fears were overblown.
“Cattle ranchers know how to deal with snowstorms in winter, so this cold weather should not result in anything more than some delivery delays,” said one trader on the Chicago Mercantile Exchange.
Live cattle for February delivery fell 0.325 cent to 77.250 cents a pound, while January feeder cattle fell 0.300 cent to 89.200 cents a pound.
Grain traders on the Chicago Board of Trade also discounted the weather reports.
“We just never had any kind of rallying power,” one trader said.
On the New York Commodity Exchange, gold bullion for current delivery slipped 30 cents an ounce to $385.30. Republic National Bank quoted a late bid for gold of $384.40, up 20 cents an ounce. Silver settled at $4.093 an ounce, down slightly from Wednesday’s $4.095.
March wheat fell 3 3/4 cents to $2.62 1/4 a bushel, while March corn dropped 2 cents to $2.33. Soybeans for January delivery fell 4 3/4 cents to $5.61 3/4 a bushel.
Oil prices drifted downward on the New York Mercantile Exchange in sluggish trading.
Crude oil for February delivery fell 21 cents to $27.01 a barrel after rising $1.30 Wednesday, when the mercantile exchange reopened after a four-day weekend.
Traders said there were no major developments in the Persian Gulf crisis to drive the market.
Market Roundup, D6
