STOCKS : Dow Declines 5.14 in ‘Triple Witching Hour’
Blue chip stocks ended slightly lower Friday in trading that was mainly linked to the expiration of September stock and stock-index futures and options known as the “triple witching hour.”
The Dow Jones industrial average was down 5.14 points to close at 3,019.23, but was up 33.54 points for the week. Advancing issues outpaced losers 911 to 653 in extremely heavy trading on the New York Stock Exchange. The average share was up 4 cents.
Big Board volume soared to 240.69 million shares, against Thursday’s 211.04 million, but traders said there was little action toward the end of the session because of the option and futures expirations.
The NASDAQ index, however, forged ahead to a new all-time high on heavy trading, capping a three-day rally. The NASDAQ composite index rose 4.51 to 527.18, surpassing the previous record of 526.39, which was set Aug. 29.
Much of the day’s activity was attributed to maneuvering by professional traders engaged in multiple strategies involving options and futures on stock indexes and the individual stocks that make up those indexes.
That has been a typical pattern in recent years as some options and futures approach expiration on the third Friday of the last month of each calendar quarter.
Concern about expirations-related volatility kept many investors uninvolved, traders said.
“We’re doing a lot of volume but we’re not going very far,” said Robert Caputo, director of research at Swiss Bank Corp. Investment Banking Inc. “Nervousness about earnings is probably keeping people on the sidelines.”
Among the market highlights:
* News that American Home Products is buying a majority stake in Genetics Institute helped lure more buyers to the biotech group, Caputo said. Genetics rose 1 3/8 to 39 1/4, and American Home Products added 1 3/8 to 39 1/4.
* J. P. Morgan shares topped the NYSE most-active list, up 1 1/8 to 58 1/4. Analysts said they are optimistic about the company’s third-quarter earnings.
* The stock of Goodyear Tire gained 1/2 to 43 1/2. Paine Webber raised its estimates on the company.
* Shares of First Union Corp. rose 1 1/4 to 27 after it won the bidding for Southeast Banking Corp. Several analysts made positive comments on the company and raised 1992 estimates.
* Cable television stocks rallied after a Hallmark Cards unit said it is acquiring an interest in Cencom Cable Associates. Time Warner, which announced job cuts, rose 2 3/4 to 81 7/8, Tele-Communications, a Cencom stakeholder, gained 1 1/4 to 15 1/2, and Cablevision Systems rose 3 to 31 3/4.
Overseas, British shares ended firmer after a day dominated by BTR’s hostile $2.6-billion bid for Hawker Siddeley Group and talk of bigger takeovers to come. London’s Financial Times 100-share average closed 11.6 points up at 2,600.3.
In Frankfurt, the 30-share DAX average ended the day down 4.63 points at 1,616.07, up from the day’s low of 1,612.30. For the week it was down 21.55 points.
Tokyo’s stocks ended easier as investors took profits and squared positions before the long weekend. The 225-share Nikkei average was down 139.57 points to 23,192.74.
Credit
Bond prices rose amid optimism that interest rates could drop further.
The Treasury’s bellwether 30-year bond rose 9/32 point, or about $2.81 per $1,000 in face value. The long bond’s yield fell to 7.88% from 7.91% late Thursday.
Analysts said an article in the Wall Street Journal speculating that the Federal Reserve Board might cut interest rates further boosted prices in the morning. The long-term bond relinquished a little of the gain later.
The article said the Fed is concerned about the slow growth in the nation’s money supply. The most closely watched measure of the money supply, known as M2, has grown at a 2.4% annual rate so far this year, below the Fed’s target of 2.5 to 6.5% growth.
The Fed on Thursday reported M2 grew by a slim $2.6 billion in the week ended Sept. 9 after falling nearly $10 billion the previous week.
M2 includes cash in circulation, deposits in checking accounts, non-bank travelers checks and accounts such as savings deposits and money-market mutual funds.
Fed officials quoted by the Journal suggested that the central bank may have to cut the federal funds rate by up to 0.75% to stimulate growth in the money supply.
The federal funds rate, the interest on overnight loans between banks, was quoted at 5.125%, down from 5.25% late Thursday.
Currency
The dollar, weighed down by interest rate concerns, continued its slide against the major foreign currencies.
Analysts said the dollar was hurt by statements by a German official that interest rates in his country will remain at their high levels.
The official, Wilhelm Noelling, president of the state central bank of Hamburg, also said rates could go higher if labor unions receive wage increases in their next contract negotiations.
Noelling’s comments boosted the mark and helped take a further toll on the dollar, which has been falling recently along with U.S. interest rates.
The dollar, like all currencies, draws support from higher rates, which increase foreign demand for American investments. So as rates drop in this country or rise overseas, the dollar tends to slide.
The dollar fell to 1.685 German marks in New York from 1.689 late Thursday. In earlier European trading, the dollar fell to 1.685 marks from 1.689.
The Federal Reserve’s decision a week ago to lower its discount rate half a percentage point to 5.0% has taken a heavy toll on the dollar.
The dollar fell to 134.15 Japanese yen in New York from late Thursday’s 134.40.
The British pound rose to $1.732 from $1.730 late Thursday.
Commodities
Copper futures prices topped $1.10 a pound for the first time in five months as industrial users of the metal scrambled to lock in supplies.
On other commodity markets, precious metals rose; grains and soybeans retreated; livestock and meat futures were mixed, and oil futures were mostly higher.
Copper for delivery in September rose 3.10 cents to $1.101 a pound on New York’s Commodity Exchange. It was the highest settlement of a near-term copper contract since April 19.
Analysts said U.S. copper users are seeking to rebuild their stocks after letting them drop during the recession, but most available supplies are not conveniently located.
Precious metals edged higher in lackluster trading on the Commodity Exchange, supported by a weak dollar.
October gold rose 10 cents to $348.90 an ounce; December silver rose 2.1 cents to $4.138 an ounce.
Light, sweet crude oil for October delivery rose 21 cents to $21.97 a barrel on the New York Mercantile Exchange, boosted by news that shipments of Soviet petroleum products from the Odessa port had been halted and on word that Brazilian oil workers will continue an 11-day-old strike despite a court ruling that it is illegal.
