STOCKS : Dow Falls Back After Threatening 3,000
The stock market was mixed Wednesday, bogging down after an early advance carried the Dow Jones industrial average close to the 3,000 mark.
The Dow Jones average of 30 industrials, up more than 12 points in the early going, was down 5.14 points at 2,978.76 by the close.
Advancing issues outnumbered declines 824 to 742, with 527 issues unchanged in New York Stock Exchange trading.
Big Board volume came to 194.18 million shares as of 4 p.m. EDT, against 192.74 million at the same point Tuesday.
Analysts said the latest data on inflation elicited no clear-cut response from traders.
“Oils had an outstanding day. Away from that, the market was neutral,” said George Pirrone, senior trader at Dreyfus Corp.
The 30-share Dow was up for most of the session but slipped in the last hour of trading thanks to computer selling programs.
Among the market highlights:
* Oppenheimer reiterated “buy” ratings on several oil companies. Amerada Hess rose 1 1/8 to 54 1/4, Chevron was up 2 1/4 to 74, USX-Marathon gained 3/8 to 25 3/4, Texaco rose 1 1/4 to 65 7/8 and Atlantic Richfield gained 2 5/8 to 121 1/8.
* Telecom Corp. of New Zealand, whose U.S. shares began trading in New York on Wednesday, was at 26 3/8, with more than 10 million shares traded. The stock was priced at 22.58 a share and 117.5 million shares were offered.
* Several airlines were weaker after First Boston cut its estimates on the group. AMR Corp. lost 2 5/8 to 61 1/4, Delta Air Lines fell 2 3/8 to 73 and UAL Corp. lost 2 1/2 to 142.
* Intergraph Corp. dropped 3 1/8 to 21 5/8 after it reported second-quarter earnings at the low end of analyst estimates. Traders said Donaldson Lufkin took the stock off its recommended list.
* Intel Corp. also posted disappointing second-quarter earnings. Its shares lost 1 1/2 to 44 1/4.
* Gillette Co. climbed 1 1/8 to 37 5/8. Bear Stearns gave it a “buy” rating.
* Wells Fargo dropped 2 3/8 to 71 1/8. Merrill Lynch lowered its 1991 and 1992 earnings estimates on the firm.
Stocks closed lower in Frankfurt and Tokyo, but rose in London. Frankfurt’s 30-share DAX average ended down 18.34 at 1,625.51. In Tokyo, the 225-share Nikkei average was down 314.45 points to 23,060.70. London shares again closed at a record high, tracking Wall Street higher. The Financial Times 100-share average closed up 4.2 points at a record 2,561.0.
Credit
Bond prices fell moderately as the new economic figures fueled inflationary fears and traders worried about an oversupply of government debt.
The Treasury’s key 30-year bond was down 7/16 point, or $4.38 per $1,000 in face amount. Its yield, which moves inversely to the price, rose to 8.49% from 8.45% late Tuesday.
The Labor Department reported a modest 0.2% increase in the consumer price index for June. But the so-called core inflation rate--for prices outside the volatile food and energy categories--rose 0.4%. This was one-tenth of a percent higher than some analysts expected.
“It fueled fears that inflation could rear its ugly head down the road,” said Kevin Flanagan, money market economist for Dean Witter Reynolds Inc.
Inflation erodes the value of fixed-income securities such as notes and bonds.
In addition, market participants worried about a new supply of government debt. In two weeks, the Treasury plans to announce its quarterly refunding auction of three-year, 10-year and 30-year securities. The auction would take place the following week.
The federal funds rate, the interest on overnight loans between banks, was quoted at 5.688%, down from late Tuesday’s 5.813%.
Currency
The dollar fell slightly as traders awaited further signals about the economy and the Group of Seven’s stand on exchange rates.
Analysts said the dollar continued to trade in a narrow range, with profit taking responsible for the currency’s lower levels Wednesday.
The dollar declined in New York to 1.791 German marks, down from 1.800. It also fell to 136.95 Japanese yen from 137.25 late Tuesday.
Commodities
Oil prices jumped to the highest level since the final days of the Gulf War, surprising traders who said a mix of news, rumors and speculation stirred the rally.
On other markets, cattle process retreated; soybean futures fell sharply while corn and wheat were mostly higher, and precious metals and energy futures were higher.
Market analysts said the buying came on rumors of various oil production problems around the globe, as well as in reaction to an American Petroleum Institute report released the night before that showed the nation’s supply of gasoline shrank last week.
That was taken as an indication that demand could be building, after staying sluggish for months because of the recession.
Light, sweet crude oil for delivery in August settled at $22.14 per barrel, up 49 cents, at the New York Mercantile Exchange. Crude oil for next-month delivery had not closed that high since Feb. 14, when the final price was $22.32 per barrel.
At the Commodity Exchange in New York, gold settled 70 to 80 cents higher, with the July contract at $369.70 an ounce; and silver was 4.5 to 5.1 cents higher, with July at $4.412 an ounce.
Market Roundup, D8
