No Signal From Fed; Dow Off 5.82 : Market Overview

Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:

* Stocks pulled back a bit Wednesday after bond yields inched up on a report of robust new-home sales.

* The Dow Jones industrial average lost 5.82 points to 3,012.52.

* The dollar declined in New York, then early today fell below the 132 yen level in Tokyo trading.

Stocks

On the New York Stock Exchange, declining issues outnumbered advances 838 to 783 as investors grew restive over the next move in interest rates.

Big Board volume edged up to 166.38 million shares from 165.50 million Tuesday.

Wall Street has been betting for weeks that the Federal Reserve would cut interest rates another notch to aide the economy. But a strong August home sales report caused some second-guessing.

The next major economic report is Friday’s September employment data. If that shows continuing weakness in the economy, stock traders may again assume the Fed will cut rates--which could give stocks another boost.

In the meantime, some traders expressed concern about a growing number of stocks breaking down on bad earnings projections. Too many disappointments could herald a broad selloff, experts say.

Among the market highlights:

* Tech stocks were hit hard on earnings worries. Software firm Knowledgeware tumbled 6 7/8 to 12 1/4 after saying it expects a loss in the recent quarter because of slower sales. Other software losers included BMC Software, down 2 1/4 to 52; Lotus, off 2 1/4 to 29 1/4, and Microsoft, down 1 7/8 to 87.

* Another tech firm, Conner Peripherals, disclosed after trading ended that its earnings in the quarter just ended would be below year-ago results. The stock fell 7/8 to 18 1/2 before the news.

* Two recent high-fliers among smaller stocks were also crunched by earnings concerns. Duriron, which makes pumps and valves for the chemical industry, plunged 4 7/8 to 21 3/4 after saying weak sales would mean disappointing earnings in the latest quarter.

Also, retailer Cascade International slid 1 3/8 to 5 7/8 on a bearish report in the Overpriced Stock Service newsletter. The company said there is no reason for the drop.

* Southland S&L; FirstFed Financial dropped 3 1/2 to 26. The company had no comment on the drop.

* Upjohn, off 2 Tuesday on news that Britain would withdraw the company’s Halcion sleeping pill from the market, regained ground after no other countries followed suit. The stock rose 1 3/4 to 46 1/4.

* Railroads were among the few bright spots, apparently reacting to hopes for economic recovery. Conrail rose 2 3/4 to 75 1/8, Union Pacific added 3/4 to 48 1/4, and CSX jumped 1 3/8 to 52 3/4.

Overseas, German shares ended lower with Frankfurt’s DAX average losing 2.3 points to 1,607.32.

Shares rebounded in London after early losses to close little changed. The Financial Times 100-share average finished 1.4 points down at 2,644.2.

Tokyo shares closed little changed after Tuesday’s strong gains. The Nikkei average slipped 1.9 points to 24,375.11.

Credit

The yield on the Treasury’s 30-year bond rose to 7.82% from 7.8% Tuesday on word of a 6.7% jump in August new-home sales.

Traders saw the figures as making it less probable that the Federal Reserve will move to ease interest rates further to stimulate economic growth. However, the bond yield’s small move showed there was no panic selling.

The federal funds rate, the interest on overnight loans between banks, was quoted at 4.5%, down from late Tuesday’s 5.313%.

Currency

The dollar opened on a soft note in domestic trading, then tumbled again early today in Tokyo, despite the home-sales report.

The dollar closed at 132.60 Japanese yen in New York, down from 133.40 Tuesday. Early today, it plunged to 131.50 yen in Tokyo--the first time the dollar has cracked 132 yen since February.

Tokyo traders said the selling intensified on the belief that U.S. interest rates are going lower, despite signs of economic strength.

Against the German mark, the dollar fell to 1.666 marks in New York, down from Tuesday’s 1.669.

Commodities

Orange juice futures rose sharply on the New York Cotton Exchange amid speculation that next week’s government estimate for the new Florida orange crop may fall below expectations. Frozen concentrated juice for November leaped 2.7 cents to $1.2475 a pound.

Elsewhere, light, sweet crude oil for November settled on the New York Mercantile Exchange at $22.33 a barrel, up 11 cents.

On the Comex, October gold rose $1.40 to $355.60 an ounce; December silver fell 1.5 cents to $4.18.

Market Roundup, D10