STOCKS : Bank Stocks Fuel Dow’s 9.84 Increase
Widespread gains in bank stocks Monday provided an otherwise staid Wall Street session with sizzle but failed to inspire a strong blue chip rally.
The Dow Jones average of 30 industrials, up 48.30 points last week, gained another 9.84 to 2,990.61.
In the broader market, 996 issues advanced, 595 declined and 471 issues were unchanged in New York Stock Exchange trading.
Big Board volume totaled 159.34 million shares as of 4 p.m. EDT, against 173.10 million at the same point Friday.
Among the highlights:
* News that Chemical Banking Corp. and Manufacturers Hanover Corp. are merging sparked a buying spree in the banking sector.
“That is a reflection that the Street believes we’ll probably see a number of other mergers of this nature,” said Gene Jay Seagle of Gruntal & Co.
Chemical closed up 2 7/8 at 26 5/8 and Manufacturers Hanover ended up 6 1/8 at 29 3/8 in the wake of announcing their stock-swap merger.
* Elsewhere in the banking group, Chase Manhattan gained 1 7/8 to 19 7/8; Wells Fargo rose 6 1/4 to 76 5/8; First Interstate jumped 2 3/4 to 31 5/8; Security Pacific was up 2 1/4 to 24 5/8; Bank of New York rose 2 7/8 to 31 3/4; Citicorp 3/4 to 14 3/4; Banc One 1 3/8 to 42 3/8; J.P. Morgan 1/2 to 53 3/4, and BankAmerica 1 1/2 to 37 1/2.
* C&S; Sovran, which is talking merger with NCNB, rose 1/2 to 24 1/8, and NCNB stock added 3/4 to 37 3/4.
* Conseco dropped 5 1/4 to 36 after Moody’s downgraded the company’s subordinated debt. The bond rating agency also downgraded Conseco’s Western National Life Insurance unit.
* Pyramid Technology’s shares jumped 3 3/4 to 18. It is the main subcontractor in a $1.4-billion AT&T; contract.
* Shares of Polaroid gained 1 5/8 to 26 1/4 and Eastman Kodak added 5/8 to 41 after news that Kodak has settled a patent suit with Polaroid. Polaroid said it would seek ways to enhance shareholder value after the settlement.
* Warner-Lambert tumbled 3 1/8 to 70 1/4 as the company’s Alzheimer’s drug, Cognex, met further opposition from a Food and Drug Administration advisory committee.
* Westinghouse shares lost 3/8 to 25. County Natwest, Brown Bros. Harriman and Paine Webber lowered their estimates.
* ICF International’s shares gained 3/4 to 10 7/8. Alex. Brown upgraded its rating to strong buy from buy.
* Auto stocks were lower, getting no mileage out of early July domestic car sales figures that came in better than expected. General Motors dropped 1/2 to 42 1/4, Ford Motor 1 to 34 5/8 and Chrysler 3/8 to 14 1/4.
Stocks closed generally higher in overseas trading.
In London, the Financial Times 100-share average closed up 35.1 points, or 1.41%, at 2,532.5.
German shares drifted further into the summer doldrums, ending mixed in extremely light trading. The 30-share DAX average closed 1.81 points higher at 1,646.57.
Stocks closed higher in Tokyo in thin trading. The key 225-share Nikkei average closed up 321.26 points, or 1.39%, at 23,459.04.
Credit
Treasury bond prices closed mostly unchanged to lower Monday after the government projected a sharp increase in the budget deficit next fiscal year.
The Treasury’s bellwether 30-year bond fell 5/32 point, or $1.56 per $1,000 in face amount. Its yield, which rises when prices fall, stood at 8.45%, up from 8.43% late Friday.
The 4 p.m. EDT release of the budget deficit projection from the Bush Administration sent prices lower, said William V. Sullivan, director of money market research at Dean Witter Reynolds Inc.
The White House projected the fiscal 1992 deficit will be a record $348.3 billion, compared to a deficit in the current fiscal year it projected at $282.2 billion. The savings and loan bailout was blamed for much of the increase.
Higher Treasury borrowing can cause a hike in interest rates, which can lower prices of existing bonds.
The federal funds rate, the interest on overnight loans between banks, rose to 6% from 5.75% late Friday.
Currency
The dollar was mixed in quiet trading as the market took a breather after last week’s volatile sessions.
Analysts said the dollar was undergoing a period of consolidation after it soared on Thursday and then fell sharply Friday. On Thursday, traders snapped up the dollar after German officials decided against raising interest rates, but they bid the dollar down the next day in response to central bank selling of the U.S. currency.
The dollar rose in New York to 1.78895 German marks, up from 1.7885 late Friday. The dollar also edged up against the Japanese yen, rising to 136.935 yen from Friday’s 136.35.
The British pound rose to $1.65375 from $1.6505 late Friday in New York trading.
Commodities
Hot, dry weather over much of the Midwest sent corn futures prices higher Monday on the Chicago Board of Trade.
Traders fear that without more rain, high temperatures could damage unpollinated corn or stunt the growth of kernels.
On other markets, energy futures were mostly lower, livestock and meat were mixed, and precious metals were mixed.
Wheat futures settled 1.50 to 3.25 cents lower, with the contract for delivery in July at $2.66 a bushel; corn was 1.50 to 4.75 cents higher, with July at $2.375 a bushel; oats were 2 to 2.50 cents higher, with July at $1.27 a bushel, and soybeans were 2.25 to 5 cents higher, with July at $5.315 a bushel.
Grain traders were acting on the less-than-anticipated rain over the weekend and Friday’s six- to 10-day forecast for hot dry weather.
Light, sweet crude oil lost 6 to 25 cents, with the August contract settling at $21.47 a barrel on the New York Mercantile Exchange.
Precious metals futures were mixed in lackluster trading at the Commodity Exchange in New York.
Gold was 50 to 60 cents higher, with the July contract at $369.10 an ounce; silver lost 1.3 to 1.9 cents, with July at $4.352 an ounce.
Market Roundup, D10
