Dow Dips 17.22 on a Slow Day; Dollar Plunges
Stock prices sagged Monday, giving up some of last week’s gains in a quiet session.
The Dow Jones industrial average, up 33.76 points last week, lost 17.22 points to 2,989.04.
Declining issues outnumbered advances by 9 to 5 on the New York Stock Exchange, but volume totaled just 128.05 million shares, against 170.61 million Friday.
Analysts said the low-volume session was typical for a summer Monday, when many traders and investors are on long weekends.
Some analysts said there was lingering disappointment that the Federal Reserve failed to ease credit, despite a bearish July employment report released by the government Friday.
A sharp plunge in the dollar also may have unnerved some traders.
Among the highlights:
* Health maintenance organization stocks fell after a Barron’s magazine article discussed “inflated hopes” for the industry. Losers included PacifiCare Health, off 1 to 34; FHP International, down 1 1/2 to 25 1/4; U.S. Health Care, down 1 1/8 to 30 5/8, and United Health Care, which lost 1 5/8 to 48 7/8.
* Industrial stocks were weak, as traders pondered the weak July employment figures and the chance of a “double-dip” recession. Chrysler lost 1/2 to 13 3/8, Caterpillar 7/8 to 48 3/4, Dow Chemical 7/8 to 54, Alcoa 1 3/4 to 67 3/4 and United Technologies 1 1/8 to 45 1/4.
* Great Western Financial rose 1/8 to 18 7/8 on a huge volume of 5.2 million shares. A large institution was said to be involved in a complex but benign dividend-related trading strategy in the California S&L; stock.
* San Bernardino-based construction firm Kasler slipped 1/8 to 11 1/8 after trading as low as 9 7/8. The company has lost two major bidding contests for California road work in recent weeks, but Kasler has downplayed the losses.
* Among other Southland issues, Computer Sciences continued its fall on a recent bearish earnings forecast, losing 2 7/8 to 53 3/4. Electronic systems firm Logicon gained 1/4 to 28, a new 52-week high, after raising its dividend 11%.
* Casino firm Caesars World added 1/2 to 26 3/4, though late in the day the Wisconsin state pension fund said it cut its stake in Caesars to below 5%, selling 150,000 shares between June 17 and July 23.
In Tokyo, the 225-share Nikkei average lost 194.72 points to 23,833.25. In London, the 100-share Financial Times index fell 16.3 points to 2,585.4 on light volume. In Frankfurt, the 30-share DAX index closed at 1,622.03, up 6.67 points.
Credit
Interest rates eased despite the impending Treasury auction that some traders worry may saturate the market for government securities this week.
The Treasury’s 30-year bond, which rallied 1 3/16 point Friday, gained another 7/32 point, or $2.19 per $1,000. Its yield fell from 8.24% Friday to 8.22%--the lowest in nearly three months.
Some market participants expected profit taking to knock down bond prices after a sharp rise Friday in the wake of an unfavorable employment report. But an unexpectedly weak car sales report Monday helped maintain the bullish tone, as more traders bet on lower interest rates ahead.
The federal funds rate, the interest on overnight loans between banks, was 5.69%, up from 5.63%.
Currency
The dollar suffered a global decline, including a precipitous fall against the German mark.
When the dollar fell through 1.73 German marks, it touched off a wave of technical selling in New York. It ended at 1.716 marks, down from 1.741 on Friday.
The dollar also settled at 136.65 Japanese yen, down from 137.20.
“It was a rout,” said Robert White, trader at First Interstate Bank in Los Angeles. “They (speculators) pushed the dollar down with little resistance.”
Although there were no major economic reports Monday, the dollar continued to be pressured by Friday’s unexpected news that U.S. payrolls lost 51,000 jobs last month.
Weakness in the economy makes U.S. investments less attractive, encouraging global investors to look elsewhere for better returns.
“The employment numbers are evidence that there are still problems in the economy,” White said.
Commodities
Soybean and corn futures prices tumbled on the Chicago Board of Trade as cooler temperatures and unexpected rain in the Midwest offered hopes of drought relief.
Soybean futures plummeted 28 1/4 cents to 45 1/2 cents in Chicago, with the contract for delivery in August at $5.91 1/2 a bushel; corn was 4 cents to 10 cents lower, with September at $2.52 1/4 a bushel; wheat was 5 3/4 cents to 7 1/4 cents lower, with September at $2.90 3/4.
Most corn and soybean contracts closed down their permitted daily limits of 10 cents and 30 cents a bushel, respectively. The August soybean contract has no limit.
Corn and soybeans will trade with expanded limits of 15 cents and 45 cents today.
On New York’s Comex, gold finished 40 cents to 60 cents higher, with August at $356.20 an ounce; silver was 0.3 cent to 0.6 cent higher, with August at $3.92.
Light sweet crude oil for September settled at $21.47 per barrel, up 15 cents, on the New York Merc.
Market Roundup, D12
