STOCKS : Blue Chips Defy Trend; Dow Posts Gain of 6.68
Wall Street investors, frozen in indecision with only hours left before the deadline for Iraq to withdraw from Kuwait, nudged blue chips higher Tuesday but rejected most other stocks.
Volume was light as traders withdrew to the sidelines awaiting the approach of the U.N. deadline.
The Dow Jones average of 30 industrials rose 6.68 to close at 2,490.59. But analysts were quick to point out that the advance reflected gains in a limited selection of stocks.
In the broader market, advancing issues narrowly trailed declining ones in nationwide trading of New York Stock Exchange-listed stocks, with 699 up, 735 down and 542 unchanged.
Big Board volume declined to 109.98 million shares from Monday’s 120.83 million.
At the close of the session, there seemed little hope for averting a war in the Persian Gulf.
“It’s the kind of situation where you’ve got the Mideast thing just pushing every other piece of news to the background,” said Thom Brown, a managing director at Rutherford, Brown & Catherwood.
“There are more eyes glued to the news ticker than to the stock ticker,” said George Pirrone, a senior vice president at mutual fund company Dreyfus Corp.
Among the market highlights:
* Occidental Petroleum topped the active list for the second straight session, gaining 3/8 to 18. On Monday, the oil company announced a dividend cut and planned asset sales.
* J.P. Morgan dropped 2 5/8 to 42 1/8. Several analysts cut ratings and 1991 earnings estimates after the banking company reported a lower-than-expected 24% rise in fourth-quarter profit.
* UAL fell 3/4 to 113 1/4 after the company, which owns United Airlines, confirmed that it expects its biggest quarterly operating loss ever.
* Baker Hughes rebounded 1 1/4 to 22 7/8 after Smith Barney Harris Upham repeated a buy on the company, traders said.
* IBM was up 3/4 at 107 1/2, and General Electric was up 1/4 at 54 3/8.
In London, share prices closed lower. The Financial Times 100-share average closed down 9.9, or 0.5%, at 2,070.9.
German shares recovered from early losses in nervous trading before the U.N. deadline. The 30-share DAX index closed down 2.18 at 1,325.62.
The Tokyo Stock Exchange was closed for a national holiday Tuesday. In morning trading today, the Nikkei stock average was down 725.8, or 3.13%, at 22,487.43.
CREDIT: Bond Prices Decline in Light Trading The fear of an imminent war in the Persian Gulf also paralyzed bond traders as the market showed a decline in very light trading.
The Treasury’s key 30-year bond fell 11/32 point, or $3.44 per $1,000 in face amount, at Tuesday’s closing. Its yield rose to 8.39% from 8.37% late Monday.
“I can’t remember when I’ve seen so many institutional and retail investors just paralyzed, and rightfully so,” said Marilyn Cohen of Capital Insight in Beverly Hills. “Who wants to be a hero?”
Trading volume was light.
William Veronda, senior vice president of Invesco Funds Group Inc. in Denver, compared the market lull to the sleepy days during the Christmas holiday week. Normally, the market is vigorous this time of year, with investors establishing investment programs for the year.
“I don’t think anyone wants to do anything ahead of midnight tonight,” Kevin Flanagan, a money market economist for Dean Witter Reynolds Inc., said Tuesday.
Today’s release of several important economic reports, including December’s consumer price index and industrial production figures, “might start some trading,” Flanagan said.
But Fred Sturm, chief economist for Fuji Securities Inc. in Chicago, doubted that the market would be jolted back to reality by the new economic reports. The market all but ignored Tuesday’s release of an important retail sales report, he said.
The federal funds rate, the interest on overnight loans between banks, fell to 6.6875%, from 6.75% late Monday.
CURRENCY: Dollar Stays Even as Deadline Looms The dollar was little changed in quiet trading as traders sat out the midnight war deadline, limiting their reactions to the most dramatic of Persian Gulf developments.
Currency traders shed their traditional hopes for a strengthening dollar in the jittery quiet that descended on markets. Several participants said they would prefer to see the dollar open lower today if it meant war had not broken out overnight.
“Basically, people are afraid to take positions ahead of signs of war,” said Thomas Palladino, currency trader for Oesterreichische Landerbank in New York. “There could be a big swing one way or the other.”
Analysts said news that the German central bank would hold a meeting Thursday strengthened the mark because of heightened prospects of higher German interest rates.
The dollar fell slightly against the mark in New York, closing at 1.5420 marks from late Monday’s 1.5457.
In New York, the British pound fetched $1.9095, up from Monday’s $1.9035.
Tokyo markets were closed for a national holiday. In today’s early market activity, the dollar firmed against the yen and the mark.
COMMODITIES: Gold and Silver Post Small Declines Precious metals moved in a narrow range before settling lower in light trading on New York’s Commodity Exchange.
On other markets, grain and soybean futures were mostly higher, livestock were mixed, pork futures gained, orange juice surged, and copper prices fell.
“The market is now in a wait-and-see attitude,” said Peter Cardillo of Jesup, Josephthal & Co.
Cardillo noted that the precious metals market moved back and forth on word of peace initiatives by the French and calls by the United Kingdom and the Soviet Union for a final appeal to the Iraqis to withdraw.
Gold was $1.30 to $3.60 lower, with February at $400.20 an ounce. Silver was 3.4 to 3.5 cents lower, with March at $4.222 an ounce.
Copper prices plunged on the Comex as threatened strikes in South America failed to come about, Cardillo said.
Also hurting copper was the faltering economy, particularly declining sales of new cars and a drop in new housing construction.
Copper was 1.50 to 3.75 cents lower, with January at $1.0865 a pound.
Wheat was 0.50 cent to 2.50 cents lower, with March at $2.4625 a bushel; corn was 1.25 to 2 cents higher, with March at $2.3475 a bushel; oats were 1 cent to 1.25 cents higher, with March at $1.125 a bushel, and soybeans were 4.25 to 8.50 cents higher, with January at $5.565 a bushel.
Market Roundup, D6
