STOCKS : ‘Safe’ Stocks Lead Market in Rebound
Wall Street managed something of a comeback Tuesday after Monday’s sharp selloff, as investors hunted for bargains among tried-and-true stocks.
Food and health-care stocks were back in vogue, and smaller stocks also attracted buyers.
The Dow Jones industrial average rose 15.66 points to 2,913.69. Bargain hunters entered the market early in the session, finding deals after the Dow dropped 69.99 points on Monday.
The buying, inspired by a similar trend in the Tokyo and London markets, helped push the Dow up by more than 25 points after the opening bell. That soon faded, but buyers returned later in the day.
“The confusion of the information (about the Soviet Union) makes it very difficult for investors to decide what sort of effect it will have,” said Ronald Hill, investment strategist at Brown Bros. Harriman. “Now, we’re just trying to live with uncertainty.”
Volume illustrated traders’ cautious mood. On the New York Stock Exchange, 184.17 million shares traded hands as of 4 p.m., down from 229.59 million Monday.
Still, advancing issues outnumbered declines by about 2 to 1 on the NYSE, with 1,068 up, 543 down and 481 unchanged.
Some investors clearly figured they were getting good prices after Monday’s drop. “The weakness in the global markets are investment opportunities for farsighted investors,” said David Bostian, investment chief at Jesup Josephthal.
Mabon’s Kaminsky said Wall Street could continue to benefit from the perception of the U.S. market as a safe haven. “We’re starting to see some overseas money come into our market.”
Among the day’s highlights:
* The safest of the safe stocks--food and health issues--gained. H. J. Heinz rose 1/2 to 45 1/4 after trading as high as 48 5/8 on rumors that Philip Morris may be interested in buying it. Morris declined comment; its stock rose 1/2 to 70 1/4.
Shearson Lehman recommended the food and tobacco group, including Pepsico and Anheuser-Busch. Pepsico rose 1 to 31 3/4, and Anheuser-Busch rose 1/4 to 51 1/8. Other food gainers included Quaker Oats, up 1 3/8 to 59 3/8, and Campbell Soup, up 1 7/8 to 80 5/8.
In the health group, Lilly jumped 1 1/8 to 78 1/2, Amgen rose 2 1/2 to 145 3/4 and Humana added 1 1/8 to 32.
* Defense stocks rose again on expectations of renewed attention from Wall Street in the wake of the Soviet crisis. (Market Beat, D3.)
* Losing stocks were led by the industrial and transportation companies that could suffer if the world economy slows again. Farm equipment giant Deere set the tone, plunging 2 5/8 to 46 7/8 after saying third-quarter earnings will be down 72% from a year ago.
Among airline stocks, UAL dropped 5 to 128 1/4 and Delta sank 1 1/4 to 62 1/2.
* On the NASDAQ market, the composite index rose 4.41 points to 502.05. The market was led higher by such smaller issues as Neutrogena, up 1 1/4 to 20; Novell, up 3 1/2 to 63, and Tokos Medical, up 1 to 33 1/4.
Credit
The bond market advanced steadily amid signs that the new Soviet leadership was in trouble and that the Federal Reserve may move to ease monetary policy.
The price of the Treasury’s 30-year bond rose 1/4 point, or $2.50 cents per $1,000 in face amount. Its yield slipped to 8.09% from late Monday’s 8.11%.
Soviet volatility continued to fuel demand for Treasuries, considered a safe investment.
The crisis has raised questions about the strength of the U.S. economic recovery, and there were widespread expectations that the Fed would decide to lower interest rates at its policy-making committee meeting in Washington on Tuesday. However, there was no apparent sign of easing Tuesday.
A barometer of Fed policy, the federal funds rate that banks charge each other for loans, was at 5.50%, up from 5.25% Monday.
Currency
The dollar fell back against most major currencies in choppy dealings as nervous traders were pulled along by the rapidly changing developments in the Soviet Union.
The safe-haven dollar soared with early morning reports that tanks were rolling toward the Russian Parliament building, then fell when Soviet Vice President Gennady Yanayev said he wouldn’t storm the building.
The dollar closed in New York at 1.798 German marks, down from 1.824 on Monday. Against the Japanese yen, the dollar closed at 137.20, down from 138.15.
Commodities
Corn and wheat futures prices fell modestly and soybean futures rose on the Chicago Board of Trade as traders awaited word on how the Soviet coup will affect U.S. grain sales to Moscow.
In Chicago, wheat for September delivery settled at $2.7825 a bushel, down 3.50 cents; September corn fell 4 cents to $2.335 a bushel.
Crude oil futures settled at $22.27 a barrel, down 20 cents on the New York Merc after surging more than $1 Monday.
Precious metals fell on New York’s Comex amid speculation the Soviets might dump large amounts of gold to gain hard currency should Western aid be cut.
August gold dropped $2.70 to $355.90 an ounce; September silver fell 6 cents to $3.94.
