STOCKS : Dow Off 5.59 in Profit Taking; Market Mixed
Blue chip stocks closed slightly lower Thursday as investors took profits on Wednesday’s record-setting close.
The Dow Jones average of 30 industrials, up 29.07 points on Wednesday, dipped 5.59 points to 3,049.64.
In the broader market, gainers and losers were about evenly balanced on the New York Stock Exchange.
The market ignored a steep rise in the bond market.
The selling in blue chips failed to discourage smaller stocks, which posted another record close. The NASDAQ index ended at its seventh closing high in a row.
“It’s been sort of a sloppy market,” said Philip Orlando, equity portfolio manager at Unity Management Inc. “Probably anyone who wanted to buy did most of it Monday, Tuesday and Wednesday. Tomorrow will probably be pretty lackluster.”
Hopes for a further cut in interest rates helped fuel the rise in stocks Wednesday. “Much of that was already reflected in yesterday’s run-up,” one analyst said.
The anticipation of lower rates was sparked Wednesday by news that the second-quarter gross national product contracted 0.1% in July, instead of growing by 0.4% as the Commerce Department originally estimated. On Thursday morning, the Commerce Department reported that personal income declined 0.1% in July from the month before and that sales of new, single-family homes dropped 8.5% over the same interval.
“That tells the Fed that growth is still on the weaker side, and we therefore would require easing on their part,” said Gene Jay Seagle, director of technical research at Gruntal & Co.
Big Board volume came to an estimated 154.15 million shares, against 171.95 million in the previous session.
Among the market highlights:
* USX-Marathon gained 1 1/8 to 33. Oppenheimer & Co. repeated a “buy” rating on it, citing in part an oil and gas discovery in a Norwegian North Sea field in which Marathon owns a 46.8% stake.
* Shares of Philip Morris added 1/2 to 74 5/8. Smith Barney repeated a “buy” rating after the company increased its dividend Wednesday.
* Shares of Duke Power slipped 3/4 to 30 after the public staff of the North Carolina Utility Commission recommended a lower return on equity than the company had requested.
* Integraph Corp. fell 3/8 to 20 3/4 after Prudential Securities cut its rating and 1991 and 1992 earnings estimates.
* In Focus declined 1 1/4 to 12 after Hambrecht & Quist lowered its earnings estimate.
Stocks closed higher in Tokyo, Frankfurt and London.
In Tokyo, the 225-share Nikkei average rose 380.54 points to 22,002.17. Germany’s 30-share DAX average in Frankfurt slipped from its early highs to end 8 points higher at 1,655.50, while London’s Financial Times 100-share average ended up 14.0 points at 2,638.2.
Treasury bond prices climbed after the release of the personal income and new-home sales reports, indicating weak economic growth, pushing down the interest rate on the key long-term bond to a six-month low.
The price of the benchmark 30-year bond rose 19/32 point, or about $5.94 per $1,000 in face amount. Its yield, which falls when the price increases, slid to 8% from 8.05% late Wednesday.
It was lowest yield on the long bond since it closed at 7.99% on Feb. 19. The yield on the long bond is used to calculate some mortgages and other interest rates.
Bond prices often rise on signs the economy is sluggish because it makes it more likely that the Federal Reserve will ease interest rates. Lower rates benefit fixed-return securities such as bonds.
The federal funds rate, the interest on overnight loans between banks, held at 5.375% from late Wednesday.
The dollar edged higher against most major currencies, bolstered by reports that the Federal Reserve would not immediately lower interest rates.
Currency analysts said the dollar initially fell after the release of the personal income and new-home sales reports.
But markets bounced off opening lows after the central bank denied a rumor circulating in Europe that it was preparing to ease interest rates.
Lower interest rates, while considered good for economic growth, can hurt the dollar because they decrease the value of dollar-denominated investments.
The dollar closed at 1.744 German marks, up from 1.740 Wednesday. It finished at 137.15 Japanese yen, against 136.55 Wednesday.
Silver futures prices fell to six-month lows and other precious metals also dropped on fears that political upheaval in the Soviet Union could cause a massive selloff of gold.
On other commodity markets, energy futures gained; grains and soybeans ended mostly lower; and meat and livestock futures were mixed.
On New York’s Commodity Exchange, gold for September delivery was $3 lower at $350.90 an ounce; September silver was 10.1 cents lower at $3.82 an ounce.
Light, sweet crude oil for delivery in October settled at $21.97 per barrel, up 23 cents, at the New York Mercantile Exchange on word of a minor disruption of output in the North Sea.