Dow Off 2.68 as Investors Await Report on Jobs : Market Overview
* Blue chip stocks ended slightly lower as investors retreated to the sidelines ahead of today’s key unemployment report. The Dow Jones industrial average, up 66.86 points over the week’s first three sessions, lost 2.68 points to 3,069.10.
* Smaller stocks again advanced to new highs.
* Bond yields were mostly unchanged, pausing after their recent steep slide.
Stocks
Despite the Dow’s small loss, advancing issues outnumbered declines 5 to 4 on the New York Stock Exchange. Volume retreated to 182.23 million shares from Wednesday’s 200.79 million.
Analysts said investors found few incentives to buy or sell aggressively ahead of the October employment data.
A sluggish jobs report could prompt the Federal Reserve to lower interest rates again. The White House predicted Thursday that rates will be cut to get the flagging economy moving.
Many economists believe that the Fed on Wednesday eased the federal funds rate--what banks charge to borrow from each other--to 5% from 5.25%.
But the stock market is expecting more, analysts say--in particular, a cut in the Fed discount rate, another benchmark rate. Because that has already been built into stock prices, “I don’t think a discount rate cut will set the market afire if it happens,” said Edward Laux, trader at Kidder Peabody.
Meanwhile, investors showed no signs of ending their new love affair with smaller stocks. The NASDAQ composite index rose 1.66 points to 542.98, a record high.
Among the market highlights:
* Many drug stocks rose on expectations of upcoming federal approval for a host of new drugs. Immune Response jumped 6 1/8 to 59 1/4 and Rhone-Poulenc soared 6 7/8 to 58 1/2 ahead of an FDA committee meeting that will deal with measuring the effectiveness of AIDS vaccine trials.
Also, Syntex rose 1 3/8 to 45 3/4 after the FDA granted it approval to market Ticlid as a treatment for strokes. Other drug winners included Merck, up 4 1/8 to 137 1/4; Lilly, up 1 1/4 to 76 7/8, and Genzyme, up 3 to 52 1/2.
* Software firm Borland rocketed 9 3/4 to 67 3/8 on optimism over new products--which caused archrival Lotus Development to plunge 3 1/4 to 24 1/4.
Among other tech issues, chip-maker Advanced Micro Devices gained 1 3/4 to 12 7/8. It told analysts that its revenue for the fourth quarter will be at the upper end of a previously projected range. AMD’s gains are expected to come at the expense of competitor Intel, which slid 3 1/8 to 40 5/8.
* In the financial sector, Household International plunged 7 3/8 to 49 7/8 after it said it no longer expects record earnings per share in 1991, partly because consumer loan delinquencies are rising.
* Among Southland issues, cancer-treatment center operator Salick Health lost 1 1/4 to 11 3/4 after saying it plans to sell 2 million new shares to raise capital. There are 5.5 million now outstanding. Elsewhere, IHOP Corp., parent of International House of Pancakes, rose 7/8 to 14 1/8 after reporting higher quarterly earnings.
Torrance-based retailer Standard Brands Paint, which has been struggling financially, fell 1/2 to 2 5/8, a new all-time low.
Overseas, shares fell in London after a pessimistic business forecast by the Imperial Chemical conglomerate. The Financial Times 100-share average dropped 11.1 points to 2,566.0. In Frankfurt, the DAX average dipped 0.77 of a point to 1,582.06.
In Tokyo, the Nikkei average ended up 241.10 points at 25,222.28.
Credit
The bond market seemed to shrug off two economic releases as it waited for today’s October unemployment report.
The Treasury’s 30-year bond slipped 5/32 point, or $1.56 per $1,000, boosting its yield slightly to 7.91% from Wednesday’s 7.89%. Most bond yields were flat.
The Labor Department said the number of Americans filing new claims for unemployment benefits fell a sharp 47,000, to 405,000, in the week ending Oct. 19. That was the lowest level since September.
But the Commerce Department said factory orders dropped sharply in September, another signal that the recession may not be over.
In the unemployment report today, many economists expect a slight rise from September’s 6.7% rate. If the number is higher, bond yields could slide again in anticipation of a more aggressive Federal Reserve cut in interest rates.
Currency
The dollar was mixed as traders anticipated further U.S. interest rate cuts.
The dollar rose in New York to 1.672 German marks from 1.671 Wednesday, but fell to 130.75 Japanese yen from 131.05.
Commodities
Wheat prices rebounded on the Chicago Board of Trade amid fresh signs of rising Soviet grain demand and worries about cold-weather damage to the winter wheat crop.
Wheat for December rose 5 cents to $3.635 a bushel. Soybeans also rose, with November contracts up 5.50 cents to $5.58 a bushel.
Energy futures settled mostly higher in uneventful trading on the New York Merc. Light, sweet crude for December rose 26 cents to $23.37 per barrel.
Precious metals drifted lower on New York’s Comex, reflecting a lack of signs that the economy is improving. December gold fell $1 to $359.50 an ounce; December silver slipped 0.5 cent to $4.10.
