STOCKS : Dow Loses 8.72; Dollar Also Slips Amid Uncertainty About Earnings
The stock market closed slightly lower Monday as investors backed away from the market to gauge the direction of the economy and corporate earnings.
The Dow Jones industrial average fell 8.72 points and closed at 3,010.51.
Declining issues outnumbered advances by more than 4 to 3 on the New York Stock Exchange.
Big Board volume came to an estimated 146.01 million shares, down sharply from 254.52 million on Friday. The average share of stock lost 16 cents.
The Dow drifted in a 23-point range during the day and reached a low of 3,006 on program selling in the late afternoon . A snappy performance by banking issue J. P. Morgan helped to steady the blue-chip average earlier in the day.
Smaller stocks, which struck a new closing high on Friday, gave up ground.
Among the market highlights:
* Salomon Inc. dropped 3/4 to 21 3/4 on fresh speculation that its brokerage might face huge fines and trading constraints related to its violation of U.S. Treasury auction rules. It was the second-most-active NYSE stock.
* Over-the-counter stocks were hurt by a selloff of biotechnology shares. That sector fell after Morgan Stanley said the shares were overvalued. In addition, Merrill Lynch cut its rating on Synergen, which slumped 7 1/8 to 59 7/8. Elsewhere in the group, Amgen fell 1 3/8 to 56 7/8, Centocor eased 3 1/4 to 52, and Chiron slumped 3 1/2 to 69.
* J.P. Morgan continued to gain on optimism over earnings. Prudential Securities raised its estimates of 1991 and 1992 earnings on the bank. Its shares rose 7/8 to 59 1/8.
* Shawmut National lost 1 1/8 to 8 3/4 after details of a merger with Bank of Boston showed the transaction to be less favorable to Shawmut holders than had been expected.
* Image Bank gained 1 7/8 to 6 1/2 after Eastman Kodak said it is acquiring the photography company for $6.75 a share.
* Metals stocks were dragged down by a negative article in Barron’s. Alcoa lost 1 1/8 to 64 7/8, Phelps Dodge fell 1 3/8 to 74, and Inco dropped 1/2 to 30 7/8.
Overseas, market concern over poll results showing that the ruling Conservatives had lost their lead over the opposition Labor Party left the London market floundering near the day’s lows. The Financial Times 100-share average closed 20.8 points down, at 2,579.5.
In Frankfurt, shares ended a lethargic session slightly lower, disappointing some traders who had expected a gentle recovery to follow options-linked losses last week. The 30-share DAX average finished 1.91 points lower, at 1,614.16.
The Tokyo stock market was closed for a holiday; it will reopen today.
Bond prices closed modestly higher in the absence of news to influence trading.
The Treasury’s bellwether 30-year bond rose 5/32 point, or $1.56 per $1,000 in face amount. Its yield slipped to 7.87% from 7.88% late Friday.
The federal funds rate, the interest banks charge one another on overnight loans, was quoted at 5.25%, up from 5.125% on Friday.
It is widely believed the Fed lowered its goal for the funds rate to 5.25% when it cut its discount rate, or lending rate to banks, on Sept. 13.
The dollar drifted lower in quiet trading, continuing a weak performance as market participants awaited new details of the economic forecast.
The market was little moved by reports of tension between Iraqi guards and a U.N. peacekeeping force.
Kevin Lawrie, a vice president at the Bank of Boston, said the incident in Iraq caused dollar prices to rise briefly.
Other traders said the dollar fell through a significant technical level against the Japanese yen in New York trading, closing at 132.835 yen, down from 134.15 late Friday.
The dollar fell in New York to 1.674 German marks, compared to 1.685 marks Friday, and to 132.70 Japanese yen, compared to 134.20 yen Friday. The British pound closed at $1.743, down from $1.732 late Friday.
Silver futures prices charged to a two-month high Monday on New York’s Commodity Exchange, on technical buying stemming from perceptions that the economy is climbing out of recession.
On other commodity markets, gold futures also rose; coffee futures fell; cotton was down sharply; oil futures advanced; grains and soybeans were mostly lower; most livestock and meat futures fell.
Silver for delivery in September settled 8.1 cents higher at $4.168 an ounce. Gold for current delivery closed at $350.80, up $2.30 an ounce.
Oil prices rose on the New York Mercantile Exchange as traders stocked up on crude while keeping an eye on the tensions surrounding Iraq and awaiting results of OPEC’s meeting today. Light, sweet crude oil for delivery in November settled at $22.07 per barrel, up 28 cents.
Market Roundup, D14