Dow Shakes Off Inflation Data, Advances 11.19
Market Overview
Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:
Treasury bond prices dropped as a surprising jump in wholesale prices raised inflationary fears.
Stocks rallied to a higher close after shaking off earlier losses triggered by slumping bond prices. The Dow Jones average closed 11.19 points higher at 3,065.30, within striking distance of its record 3,077.15 set Oct. 18.
Stocks
Stocks got off to a rocky start as bonds plummeted on a report by the Labor Department that wholesale prices shot up 0.7% in October, the biggest rise this year. Economists had expected a 0.1% rise. At one point, the key index was off as much as 15 points.
Two broader markets rose to record highs for a second consecutive day. The NYSE composite index of all listed common stocks rose 0.37 point to a record high of 219.37. The Standard & Poor’s composite index of 500 stocks gained 0.67 to a new high of 397.41.
The American Stock Exchange index lost 0.56 to 391.81.
The NASDAQ over-the-counter index rose 0.49 to a record high of 556.17. It was the fifth straight session of new highs for that index.
Big Board volume was active at 184.48 million shares, down from Tuesday’s 199.54 million.
Bonds were hurt by speculation that the inflation data may delay more rate cuts by the Federal Reserve.
The late rebound was helped by a comment from the Bureau of Labor Statistics that the 0.5% core inflation rate--which excludes food and energy prices--may have been overstated by 0.1% or 0.2%.
“Today has been an outstanding demonstration of the strength and resiliency of the (stock) market,” said Jack Solomon, technical analyst at Bear Stearns.
* Eastman Kodak closed up 1 at 49 1/2; GM rose 1 5/8 to close at 34 1/2.
* But a large loss in Walt Disney stock weighed on the Dow 30-stock index. Disney was down 2 1/2 at 110 3/8 at the close.
Among the market highlights:
* Immune Response tumbled 15 3/4 to 46 after an advisory committee of the Food and Drug Administration dimmed hopes for an accelerated approval for its AIDS vaccine. The company said clinical trials seem to show that the drug is safe but have not demonstrated whether it is effective. (Story, D2)
* Rhone-Poulenc Rorer, an Immune Response partner, slipped 2 3/4 to 55 3/4. Medimmune, which is also working on an AIDS preventive therapy, fell 2 1/4 to 51 1/4. Elsewhere in the group, Synergen lost 6 1/8 to 59 7/8.
* Kimberly-Clark dropped 6 3/8 to 94 after the company cautioned analysts about its 1992 estimates.
* Scimed Life jumped 6 1/4 to 58 1/2 after it told analysts that it was not on the verge of withdrawing its Express catheters from the U.S. market because of patent challenges. The company had previously said it was reviewing the product’s commercial status.
* Goodyear Tire fell 1 1/8 to 49 3/8 after its secondary offering of 12 million shares was priced.
* McDonnell Douglas added 2 1/8 to 79 1/8. The company is discussing the sale of up to 40% of its commercial transport business to unidentified third-party investors for up to $2 billion.
Overseas, stock prices fell sharply lower on the London Stock Exchange. The Financial Times 100-share average was down 29 points, or 1.1%, at 2,546.5.
Shares also slumped on the Tokyo Stock Exchange in thin, directionless trading. The 225-share Nikkei average was down 251.50 points, or 1.02%, to 24,416.23.
In Frankfurt, stocks ended steady, with the DAX 30-share index closing up 2.01 at 1,623.23.
Credit
The price of the Treasury’s bellwether 30-year bond fell 27/32 point, or $8.44 per $1,000 in face amount. Its yield rose to 7.86% from 7.79% late Tuesday.
The market will get a better idea of inflationary trends with the release today of the consumer price index for October, which reflects retail prices.
The federal funds rate, the interest on overnight loans between banks, was quoted at 4%, down from 4.635% late Tuesday.
Currency
The dollar was mostly lower in domestic trading after rising overseas in a muted reaction to a surge in inflation last month.
The dollar closed at 1.636 German marks, down from Tuesday’s 1.640 marks, and at 130.00 Japanese yen, up from 129.95.
The British pound rose to $1.775 in New York from $1.770 on Tuesday.
Commodities
Prices of energy futures rose sharply in early trading on the New York Mercantile Exchange on reports of a huge draw down in U.S. gasoline stocks, then fell on continued weakness in home heating oil contracts.
On other commodity markets, grains and soybeans gained; precious metals advanced, and meat and livestock futures fell.
Light, sweet crude oil for delivery in December settled 15 cents lower at $22.35 a barrel; December home heating oil fell 0.66 cent to 65.90 cents a gallon; December unleaded gasoline rose 0.61 cent to 62.13 cents a gallon; December natural gas fell 1.50 cents to $2.040 per 1,000 cubic feet.
Petroleum futures had fallen for seven straight sessions, with plunging gasoline and heating oil prices dragging crude lower. But an American Petroleum Institute report nearly helped turn that around. The API reported late Tuesday that the nation’s gasoline supply fell last week by 4.1 million barrels to 200.2 million, well below the 205 million barrels considered by the government to be the nation’s minimum operating level.
On New York’s Commodity Exchange, gold for December delivery rose 60 cents to $357.30 an ounce; December silver rose 1 cent to $4.048 an ounce.
Market Roundup, D8
