FINANCIAL MARKETS : STOCKS : Market Marks Time as U.N. Deadline Nears
Wall Street stocks ended a quiet session with modest gains Friday as investors waited on the sidelines before Tuesday’s United Nations deadline for an Iraqi withdrawal from Kuwait.
The Dow Jones average of 30 industrials rose 2.73 to 2,501.49, trimming its loss for the week to 64.60.
Advancing issues outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 751 up, 701 down and 540 unchanged.
Volume on the Big Board came to 123.05 million shares, against 124.51 on Thursday.
Although some traders remained hopeful that the Persian Gulf crisis could be resolved peacefully, few were willing to take chances after being stung by Wednesday’s dramatic reversal.
On that day, stocks went into a free fall, with the widely watched Dow tumbling 80 points in minutes after talks between the top U.S. and Iraqi diplomats failed.
“We may have to live through holding our breath for some time,” said David Holt, director of technical research at Wedbush Morgan Securities.
After a glut of news this week, mostly involving the tenuous Persian Gulf situation, investors found little in Friday’s session to draw them from the sidelines.
“As we come near the 15th of January, people want to be cautious,” said Richard Meyer, managing director of institutional trading at Ladenburg Thalmann.
A snowstorm that blanketed the New York area prompted an early close in the U.S. bond market and gave stock investors an excuse to leave early.
“There was no one to support the market,” said one trader.
News of a 0.6% drop in December producer prices had little impact on stocks.
“The Mideast is the news item of the day,” Holt said. “Everything else is going to take a back seat.”
After the failure of U.S.-Iraq talks in Geneva on Wednesday, investors pinned their hopes on U.N. peace efforts. U.N. Secretary General Javier Perez de Cuellar will hold talks today with Iraqi President Saddam Hussein.
Perez de Cuellar said that he had no set plan for averting a gulf war but that he may consider a U.N. peacekeeping force.
Among the market highlights:
* Motorola tumbled 2 3/4 to 47 3/4. Merrill Lynch cut its rating and earnings estimates because of concerns over its cellular telephone business.
Several rock-bit manufacturers were lower on news that the Justice Department was investigating bit prices in a probe of oil and gas drilling companies.
* Baker Hughes dropped 1 1/4 to 21 5/8 and Smith International fell 1 to 12, but Dresser Industries gained 1/4 to 19 1/4.
* Snap-On Tools dropped 2 1/8 to 28 7/8 after it forecast lower earnings.
* Household International, a financial services company, rose 1 3/8 to 30 after it said it expects record per-share earnings for 1990.
* Amre Inc., the home products maker, dropped 2 to 3 3/4. The company said it discovered that its financial statements for the fiscal year ending July 31, 1988, and for certain other periods were materially incorrect.
* Gainers among the blue chips included American Telephone & Telegraph, up 3/8 at 29 3/4; Eastman Kodak, up 1/8 at 39 5/8; Du Pont, up 1/4 at 33 1/2, and International Paper, up 3/8 at 53 1/4. But Westinghouse Electric dropped 1 1/8 to 23 and General Motors lost 1/8 to 31 3/4.
In foreign trading, Tokyo stocks closed higher in active trading on hopes that Iraq would mount a new diplomatic initiative to end the Persian Gulf crisis peacefully. The Nikkei 225-share index closed up 193.66 at 23,241.02.
News that Soviet troops had stormed Lithuania’s defense headquarters wiped out an early surge in German share prices, swinging market attention back to the political worries it had temporarily shelved. The 30-share DAX index ended 1.14 points lower at 1,382.26.
British shares ended a mixed day with slight losses, reflecting nerves over the Persian Gulf crisis. The Financial Times 100-share index closed down 2.6 points at 2,106.1.
CREDIT Bond Prices Drop in Light Trading Bond prices fell moderately in quiet trading as traders sold securities before the Jan. 15 U.N. deadline.
The Treasury’s bellwether 30-year bond was down 13/32 point, or $4.06 per $1,000 in face amount. Its yield was up to 8.36% from 8.32% late Thursday.
Analysts said the long bond’s price drop began with the government’s release of new inflation rate data and was sustained by an unwillingness among traders to hold long-term securities amid accelerating Persian Gulf war fears.
Trading of government securities was generally quiet and ended an hour earlier than usual, at 3 p.m., because of snow in the New York area.
The federal funds rate, the interest on overnight loans between banks, fell to 6.675% from late Thursday’s 7.25%.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 1/32 point to 91.02. The average yield to maturity was unchanged from late Thursday’s 7.48%.
CURRENCY Dollar Mixed as Investors Retreat The dollar finished mixed in subdued trading on world currency markets Friday as currency investors also retreated to the sidelines to await the U.N. deadline for Iraq to withdraw from Kuwait.
Trading was quiet worldwide. Snow in New York sent many traders home early, and activity virtually had ceased at around midday.
“There is a premium on liquidity and safety,” said Marc Chandler, an analyst at the firm IDEA. By keeping cash on sidelines, traders will be able “to go either way” next week, he said.
“One missile lobbed or an agreement (for Iraq) to pull out will send the dollar up or down, and any position now is a crap shoot,” said Andrew Busch, a trader at Harris Trust & Savings Bank in Chicago.
Continued unrest in the Soviet Union also affected trading, with most of the concern reflected in sales of German marks.
The dollar rose to 1.5255 German marks from 1.5315 on Thursday but fell to 134.05 Japanese yen from 134.50.
In New York, the British pound sold for $1.9075, less expensive than Thursday’s $1.9121.
Other late dollar rates in New York, compared to late Thursday’s rates, included: 1.2766 Swiss francs, down from 1.2825; 5.1855 French francs, up from 5.1810; 1,150.00 Italian lire, up from 1,149.00, and 1.1528 Canadian dollars, unchanged.
Other late dollar rates in Europe, compared to late Thursday’s rates, included: 1.5255 German marks, down from 1.5315; 1.2800 Swiss francs, down from 1.2880; 5.2040 French francs, up from 5.1960; 1.7290 Dutch guilders, up from 1.7267; 1,153.75 Italian lire, up from 1,152.00, and 1.1524 Canadian dollars, down from 1.1525.
COMMODITIES Gold Futures Up on Mideast Uncertainty Gold futures ended higher on New York’s Commodity Exchange in light trading influenced by the Middle East uncertainty. Platinum also rose amid increased Baltic tensions as Soviet troops arrived in Lithuania.
On other markets, energy futures retreated; grain and soybeans were lower, and livestock and pork futures were mixed.
Trading in gold futures was light as the market awaited further developments in the Persian Gulf crisis, said Peter Cardillo, director of commodities research at Jesup, Josephthal & Co.
Traders were reluctant to take new positions before the U.N. deadline for Iraq’s withdrawal from Kuwait.
Gold settled $1.20 higher, with the contract for delivery in February at $393.30 an ounce; silver was 3 cents higher, with March at $4.175 an ounce.
Platinum was $5.80 to $6.30 higher, with January at $418.60 an ounce.
Energy futures declined on the New York Mercantile Exchange, despite the approaching U.N. deadline.
“The market was pretty thin, and continues to be nervous,” said analyst Andrew Lebow of E. D. & F. Man International Futures Inc. “It is hard to subscribe (the decline) to any one piece of news.”
Heating oil also dropped, despite heavy snowfall in the Northeast.
Light sweet crude was 39 to 50 cents lower, with February at $27.29 a barrel; heating oil was 1.77 cents lower to 0.28 cent higher, with February at 77.36 cents a gallon; unleaded gasoline was 1.21 to 1.70 cents lower, with February at 72.88 cents a gallon, and natural gas was 0.005 cent lower to 0.010 cent higher, with February at $1.695 per 1,000 cubic feet.
Market Roundup, D6
