STOCKS : Market Stages Modest Rally; Dow Rises 6.93
The stock market recouped a little of last week’s losses with a modest rally in quiet trading Monday.
The Dow Jones average of 30 industrials, down 89.36 last week, gained 6.93 to 2,865.84.
Advancing issues outnumbered declines by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 952 up, 610 down and 476 unchanged. The average share rose 22 cents.
Big Board volume totaled 153.92 million shares, down from Friday’s 168.1 million.
The NYSE’s composite index rose 1.26 to 202.39.
“It looks like we’re getting a snap back from last week’s decline, but one that seems to lack in enthusiasm,” said Marshall Acuff, portfolio strategist at Smith Barney.
Earlier, Walt Disney Co. joined the list of companies with potential earnings disappointments when analysts at several major Wall Street houses cut their forecasts. Last week, IBM, 3M, Eastman Kodak and Waste Management were among the companies that issued warnings about their earnings.
Some analysts believe that the market will soon recover from its recent slump, however.
“The reason the market responded so negatively to earnings is because it was short-term overbought,” said Alfred Goldman, director of technical research at A. G. Edwards.
He said that end-of-quarter window dressing, during which portfolio managers fine-tune their holdings, will produce buying later this week. “The primary trend in this market is still up,” Goldman said.
Tobacco stocks fell on speculation that a Supreme Court decision to hear a case on cigarette pack health warnings and personal injury lawsuits by smokers might clear the way for thousands of such suits against the industry.
Among the market highlights:
* After being up 1 point early in the session, Loews Corp. closed down 3/8 to 104 1/4. Philip Morris, which traded as high as 70 1/2 during the session, closed at 66 7/8, down 2 5/8. RJR Holdings, which traded as high as 13 during the session, closed at 11 3/4, down 1/4.
* Market bellwether IBM, recovering tentatively from last week’s selloff, rose 1 7/8 to 113 1/2.
* In the over-the-counter market, Microsoft jumped 4 1/2 to 98 1/4. A Goldman Sachs analyst repeated his buy rating. Elsewhere in the group, Apple Computer rose 1 1/4 to 64 1/2, Seagate Technology added 1 1/8 to 15 1/4 and Autodesk gained 3 to 51 1/4.
* Drug companies were also stronger, with Johnson & Johnson rising 3 5/8 to 95 and Amgen up 6 3/4 to 126 3/4. Shearson Lehman repeated strong buy ratings on the drug makers, saying that both will benefit from the highly lucrative market for erythropoietin. The compound is a hormone produced by healthy kidneys and stimulates the body’s natural production of red blood cells.
* Walt Disney shares lost 3 1/2 to 115 1/2. Analysts at Donaldson, Lufkin & Jenrette; Goldman Sachs, and Wertheim Schroder cut estimates on the company.
* Shares of Oryx Energy lost 2 5/8 to 34 on fears that the company’s first-quarter results may be unexpectedly weak because of cheaper energy prices, analysts said.
In Tokyo, the key Nikkei index inched up 32.60, or 0.1%, to close at 26,645.79. Volume was moderate at 550 million shares against 500 million Friday.
Share prices on the London Stock Exchange fell in light, uneventful trading. The broad-based Financial Times 100-share index ended down 8.6 at 2,431.9.
German shares closed mostly down but above intra-day lows in quiet pre-holiday trading. The 30-share DAX index ended 4.79 points lower at 1,515.50.
In Tokyo, the key Nikkei 225-share index inched up 32.60 to close at 26,645.79.
Commodities
Wheat futures advanced slightly but prices for other farm commodities retreated on the Chicago Board of Trade.
The soybean complex declined under the continued strength of the dollar and the accompanying slow export demand for beans and soy oil, said Dan Cekander, a grain analyst in Chicago with Rod-man & Renshaw Inc.
Wheat futures derived some strength from concerns about dry conditions in the central and southern plains.
The forecasts are only for light showers this week, and if this holds true, Cekander noted, Kansas will have received 60% of its normal moisture for March, Oklahoma 40% and Texas 20% or less.
The hard red winter wheat crop could suffer is more rain isn’t forthcoming.
Slow export demand and the weak bean market undermined corn futures.
“Corn seemed to follow beans more than wheat,” said Cekander.
On the close, wheat was 1 to 1.50 cents higher, with the contract for delivery in May at $2.84 a bushel; corn was 1 cent to 2.75 cents lower, with May at $2.5275 a bushel; oats were unchanged to 0.75 cent lower, with May at $1.2325 a bushel, and soybeans were 5.50 to 6.75 cents lower, with May at $5.70 a bushel.
Currency
The dollar shot up to nine-month highs in a powerful rally stoked by unrest in Germany and uninhibited optimism about the postwar U.S. economy.
Currency traders said the apparent absence of any major central bank interventions freed them to respond to contrasting economic moods in the U.S. and Germany.
The dollar was strengthened by the view that the end of the Gulf War has positioned the U.S. economy for a strong rebound. At the same time the German mark was weakened by protests in former East Germany involving more than 85,000 demonstrators, many shouting anti-government slogans.
Demonstrators said Chancellor Helmut Kohl had failed to keep election promises to rapidly improve living conditions in eastern Germany.
Dollar buyers were also driven by a growing sense that America’s bill for the Gulf War will be less than expected as other Western economies live up to commitments to pick up more of the tab.
“It’s a general feeling that people think we got to be getting pretty close to the bottom. I don’t think we’re going to get stuck with paying all the bills we thought we were going to pay,” said Mark Morris, a corporate trader for National Westminster Bank.
After briefly slipping as a result of technical factors, the dollar steadily rose through the day to hit roughly 2 pfennigs higher against the German mark by the close.
The dollar settled at 1.6865 German marks in New York, up from late Friday’s 1.6485. It was the currency’s highest level since June 1990.
The market’s voracious appetite for dollars was expected to continue despite expected future interventions, during which central banks sell dollars in an effort to drive down its value.
The dollar has gained steadily since America declared victory over Iraq last month. But neither the U.S. nor its trading partners would like to see the dollar go much higher because of possible negative economic results.
Walter Simon, vice president in foreign exchange at Bank Julius Baer & Co., said the biggest test of the rally’s durability comes on April 5, when the government releases its employment figures for March--the first postwar month.
In New York, the dollar closed at 139.20 yen, up from late Friday’s 137.60. The British pound fell to $1.7477 compared to late Friday’s $1.7860.
Market Roundup, D10
