STOCKS : Prices Ease in Late Selling; Dow Off 7.38
Stock prices closed slightly lower Friday as a spate of late selling linked to the “double-witching” expiration of stock options and futures pushed down blue chips in the last minutes of trading.
The Dow Jones average of 30 industrials fell 7.38 to close at 2,886.63. The key average lost 33.54 points for the week.
In nationwide trading of New York Stock Exchange-listed stocks, 684 issues rose, 813 fell and 544 issues were unchanged.
Big Board volume came to 174.21 million shares, up from 154.46 million on Thursday.
News of a smaller-than-expected U.S. trade deficit in March depressed stock and bond prices early in the session but didn’t have a lasting impact on the market, traders said.
The trade gap shrank to $4.05 billion in March, the smallest in almost eight years.
“I would think the market would have reacted more strongly to the news,” said Gene Jay Seagle, a vice president at Gruntal & Co.
He pointed out that the market is looking for further signs of economic weakness that would spur the Federal Reserve to cut interest rates again. The 26.5% decline in the trade deficit was seen as a mixed signal caused mostly by weak demand for imports in a recession.
Among the market highlights:
* Ann Taylor Stores Corp. was high on the NYSE most-active list on its first day of trading. The stock was trading at 26 7/8 on about 4.2 million shares, off its opening price of 27.
* Tobacco shares slipped amid investor concerns about anti-cigarette proposals before Congress and in the European Community. Philip Morris fell 7/8 to 64 7/8 and Loews lost 1 1/4 to 98 1/4.
* Analysts at Shearson and Prudential Securities increased their 1991 loss estimates for the Big Three auto makers. General Motors Corp. lost 5/8 to 36 3/8 and Ford Motor Co. slipped 1/8 to 32. Chrysler Corp. added 3/8 to 12 5/8.
* Clorox added 2 3/8 to 40. Wertheim Schroder raised its rating on the stock after Clorox said it decided to exit its unprofitable detergent business.
* Triton Energy rose 3/4 to 16 3/4 as investors speculated that a Colombian oil find will turn out to be significant, analysts said.
* In over-the-counter trading, Apple Computer fell 2 to 47. The company declined comment on a report that it was planning to lay off up to 2,000 people.
* Mail Boxes Etc. fell 3 3/4 to 20 1/4. The postal service center chain warned of lower-than-expected results.
In foreign trading, stocks closed higher in Japan, mostly unchanged in Germany and lower in London. Tokyo’s 225-share Nikkei average rose 181.67 points to 25,701.94. In Frankfurt, the 30-share DAX average closed 0.79 points higher at 1,598.87. London’s Financial Times 100-share average fell 18 points to 2,453.9.
Credit
Bond prices reversed course in mid-session to finish with a gain after losing ground in the morning.
The Treasury’s bellwether 30-year bond rose 9/16 point, or $5.63 per $1,000 in face amount. Its yield fell to 8.28% from 8.33% late Thursday.
Marilyn Schaja, money market economist at Donaldson, Lufkin & Jenrette Securities Corp., said the rise appeared linked to the dollar’s increase on the news of a narrower U.S. trade deficit in March.
The sign of a stronger U.S. economy helped push up the dollar against major currencies. A stronger dollar means cheaper imports and less inflationary pressure, the No. 1 fear of fixed-income investors.
Samuel Kahan, chief economist at Fuji Securities Inc., said the bond price fluctuation was probably due to some random movement.
“It went down because it’s silly and it went up because it’s silly,” he said.
The federal funds rate, the interest on overnight loans between banks, fell to 5.647% from 5.813% late Thursday.
Currency
The dollar closed sharply higher, boosted by the plunge in the U.S. trade deficit and news that Sweden was aligning the krona with the European Currency Unit.
Analysts said the dollar jumped after the Commerce Department released the trade deficit report.
Once that news was digested, the U.S. currency began to slip, but it surged again after the Swedish central bank announcement that it was linking the value of the krona to the European Currency Unit, said Mike Faust, a foreign exchange analyst with MMS International in Chicago.
Analysts said the move would require Swedish banks to adjust their foreign exchange holdings, increasing demand for the dollar by as much as $20 billion.
Traders reported that the Federal Reserve and the German Bundesbank were selling dollars late in the session, apparently in hopes of halting the dollar’s sharp climb. However, the effort failed.
The dollar soared more than four pfennigs against the German mark in New York, closing at 1.7360 marks, up from 1.69475 late Thursday. It closed at 138.20 Japanese yen, up from the previous day’s 137.45.
The British pound tumbled against the dollar, falling to $1.7125 from $1.7495 late Thursday.
Other late dollar rates in New York, compared to late Thursday’s prices, included: 1.4700 Swiss francs, up from 1.43735; 5.8855 French francs, up from 5.7460; 1,291.00 Italian lire, up from 1,261.00, and 1.14945 Canadian dollars, down from 1.14995.
Commodities
Cattle futures advanced on the Chicago Mercantile Exchange.
On other commodity markets, pork futures fell; oil futures rose; precious metals fell, and grains and soybeans were mixed.
Live cattle settled 0.15 to 0.50 cent higher, with June at 74.92 cents a pound, and feeder cattle were 0.10 to 0.45 cent higher, with May at 89 cents a pound.
Oil prices finished mostly higher on the New York Mercantile Exchange as traders evened up their positions ahead of the weekend. Light, sweet crude oil settled 4 to 29 cents higher, with June at $21.18 a barrel.
Precious metals drifted lower in lackluster trading on New York’s Commodity Exchange. Gold fell $1.10 across the board, with June at $356 an ounce; silver was 0.3 to 0.5 cents lower, with May at $4.003 an ounce.
Market Roundup, D6
