STOCKS : Cautious Dow Up 2.78 in Tepid Trading
Wall Street wound down a tepid session mostly lower Monday, but blue chip stocks managed to eke out a small gain in the last few minutes of trading.
The Dow Jones average of 30 industrials closed up 2.78 at 2,941.64. But the broader market didn’t fare as well. Declining issues edged advances, with 793 down, 741 up and 532 unchanged in nationwide trading of New York Stock Exchange-listed stocks.
The day’s light trading volume reflected the cautious mood. On the floor of the Big Board, only 128.36 million shares changed hands, down from 158.16 million Friday.
Volume was the lowest since nearly 110 million shares changed hands Jan. 15--the day before the Gulf War erupted.
Some computerized buying boosted prices slightly, but investors as a whole were unenthusiastic, traders said.
Concerns about President Bush’s weekend hospitalization for an irregular heartbeat gave already wary investors an excuse to remain on the sidelines early in the session. Bush returned to the White House in the morning and resumed his workload.
“The market was very nervous over President Bush’s health. I think the reality of (Vice President) Dan Quayle being President spooked the market a little bit,” said Edward Shopkorn, a managing director at Mabon Securities.
Analysts noted that the market was sliding off last week’s rise that was sparked by the Federal Reserve’s move to lower interest rates to stimulate economic activity.
Investors also stayed sidelined ahead of the Treasury’s $37-billion auction of notes, bills and bonds beginning today.
News that American Telephone & Telegraph Co. had won its battle to acquire NCR Corp. had little market impact, traders said.
“People thought that (the AT&T-NCR; merger) was just a matter of time,” said Alice Sadlo, a vice president at McDonald & Co. “It seems people are trying to absorb where we are, and what they think the economy is going to do,” said Shopkorn. “Absent any good news, I think the market will drift down.”
Among the markets highlights:
* NCR was up 1/4 to 103 3/4 on the news that it would merge with AT&T; for $110 per share in AT&T; stock. Arbitragers said there were concerns that the deal would take four to five months to complete.
* AT&T; was off 3/8 to 36 3/4.
* Shares of Blockbuster Entertainment continued to slip after the news Friday that a franchisee, Cox Enterprises, was selling 82 Blockbuster Video stores. Blockbuster slipped 5/8 to 9 7/8. Merrill Lynch reiterated its “above average” rating, saying the news would not affect Blockbuster’s earnings.
* Active issues besides Blockbuster included Alcan Aluminum, up 1/8 to 20 7/8, and RJR Nabisco, down 1/4 at 10 7/8.
* Among the blue chips, IBM was up 1 at 103 3/8, Ford Motor was down 7/8 at 33 3/8 and J. P. Morgan was up 1/8 to 54.
* American Cyanamid was up 1 5/8 to 63 3/8. Traders said Merrill Lynch raised estimates on it.
* United Healthcare added 2 1/4 to 43 7/8 after it reported sharply higher first-quarter earnings.
* Borland International slipped 3 1/4 to 47 1/2. Labe Simpson said it expects the company to lose a copyright infringement case to Lotus Development.
* Datascope was down 2 1/4 to 60 3/4. Traders said a Shearson Lehman analyst downgraded the stock on the basis of its price appreciation.
In foreign trading, German shares ended broadly lower in quiet trading that was overshadowed by worries about lower company earnings. The DAX 30-share index fell 7.85% to 1,623.99.
The Tokyo and London markets were closed for holidays.
Credit
Bond prices finished slightly higher in light dealings after concerns over the President’s health abated.
The Treasury’s bellwether 30-year bond rose 1/8 point, or about $1.25 per $1,000 in face amount. Its yield, which moves opposite to price, fell to 8.21% from Friday’s 8.22%.
Analysts said the credit markets were lower in morning trading as investors awaited word on Bush.
In addition, the market treaded lightly in advance of the quarterly auction. Traders often pause in advance of government auctions, which sharply increase the amount of government debt on the market.
The federal funds rate, the interest on overnight loans between banks, fell to 5.688% from 5.50% Friday.
Currency
The dollar closed lower after fluctuating in a session driven by concerns about President Bush’s health and interest rates.
Analysts said worries about Bush’s hospitalization put a damper on the dollar at its openings in Europe and in domestic trading. After the President returned to the White House, the greenback rebounded.
In New York, the dollar closed at 1.7325 German marks, compared to 1.7483 Friday, and it fell to 138.185 Japanese yen, compared to 138.85.
Robert Ryan, corporate foreign exchange manager with Bank of New York, said the mark started to climb as the market speculated that interest rates in Germany would remain stable while rates in other countries would decline.
Ryan called the dollar’s finish “an overreaction on the downside.”
High interest rates lend support to a currency, so rising rates in Germany would be a positive sign for the mark and falling rates elsewhere would undermine other currencies.
Other late dollar rates in New York, compared to Friday, included: 1.4675 Swiss francs, down from 1.4760; 5.8625 Swiss francs, down from 5.9125; 1,282.25 Italian lire, down from 1,294.75, and 1.15055 Canadian dollars, down from 1.15125.
Commodities
Fears that unrest in the Soviet Union and South Africa could interrupt the supply of platinum sent the futures price for the metal sharply higher.
On other markets, energy futures advanced and grain, soybean and livestock futures were mostly higher.
The bulk of the world’s supply of platinum comes from the Soviet Union and South Africa, and unrest in both countries rattled the market, said William O’Neill, a senior futures strategist for Merrill Lynch in New York.
Reports of rioting in Soviet Armenia and the decision by the Soviet Union to turn over coal mines to the Russian republic create a sense of uncertainty, he said. In South Africa, continuing factional violence in black townships took 56 lives over the weekend.
Platinum futures were $7.30 higher at the New York Mercantile Exchange, with the contract for delivery in July at $396 a troy ounce.
Platinum can be particularly susceptible because of its narrow source of supply and the fact that it’s both an industrial and precious metal.
At the Commodity Exchange in New York, gold was $1.30 to $1.50 higher, with May delivery at $355.40 an ounce.
Energy futures advanced on the New York Mercantile Exchange. Light, sweet crude oil settled 31 cents higher, with the June contract at $21.68 a barrel.
