Dow Slips Back 15.21 on Selling in Blue Chips : Market Overview
Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:
* Stock prices finished mixed as selling in some blue chips kept the market from extending Tuesday’s rise to record highs. The Dow Jones industrials, up 38.69 points Tuesday, dropped back 15.21 points to 3,257.60.
* Government bond yields eased after the Treasury said it will sell fewer securities than the market expected at next week’s quarterly auction.
Stocks
Though blue chips fell, advancing issues still outnumbered declines by 9 to 7 on the New York Stock Exchange. Big Board volume came to a robust 262.44 million shares, up from 233.68 million Tuesday.
Smaller stocks held strong, led by selective buying in health care and tech shares. The NASDAQ composite index closed at a record high of 636.97, up 5.97.
The Treasury’s bond-sale announcement spurred a late flurry of activity in the bond and stock markets, but analysts said the news did not yield major surprises.
“The bond market didn’t react badly to the refunding,” said James Wright, senior portfolio manager at Bank One Ohio Trust. “People will be waiting to see what happens in the economy.”
The January unemployment report will be released Friday.
Among the market highlights:
* Eastman Kodak, a component of the Dow index, dropped 4 1/4 to 46 1/2 after reporting disappointing results. Smith Barney and Bear Stearns downgraded their ratings on the company.
* Pacific Enterprises plunged 6 to 18 7/8 after the company suspended its quarterly dividend, reported a 1991 loss of $88 million and said it plans to sell some businesses.
* Other big losers included Acuson, a medical products company, which dropped 8 to 22 7/8 after saying its earnings growth has stalled, and Stanhome, a maker of household products, which plunged 6 3/8 to 35 after it issued a disappointing fourth-quarter earnings forecast.
* On the plus side, Sears rose 2 1/2 to 42 3/8 on a better than expected earnings report, and retail stocks in general were strong. Nordstrom rose 2 1/4 to 40 1/2, Kmart gained 1 to 50 7/8 and Limited added 1 1/4 to 32 3/8.
Also, Federated Department Stores’ when-issued stock ended at 17 1/4 on the company’s first day out of bankruptcy.
* Silicon Graphics soared 3 1/4 to 54. Soundview Financial repeated a buy rating on the company after meeting with its executives.
Overseas, stocks slipped in dull trading in Tokyo. The 225-share Nikkei average was off 63.23 points at 21,936.37.
In London, the Financial Times 100-share average closed down 9.7 points to 2,547.1.
In Frankfurt, the 30-share DAX average was up 10.22 points to 1,686.62.
Credit
The price of the Treasury’s benchmark 30-year bond rose 1/4 point, or $2.50 per $1,000 in face amount.
Its yield, which moves in the opposite direction from price, dropped to 7.73% from 7.75% Tuesday.
The Treasury announced plans to borrow $36 billion from the public next week and said it will reduce the proportion of 30-year bonds it issues to cut borrowing costs.
To offset the decrease in 30-year bonds, it said it will increase the amount of three- and 10-year notes, which pay lower interest rates.
The $2-billion cut in the amount of 30-year bonds compared to the last quarterly refunding auction was the reduction that the market expected, said Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc.
The Treasury sought to reassure the market by saying that it does not intend to further decrease the amount of 10- and 30-year securities sold in future quarterly auctions.
The federal funds rate, the interest on overnight loans between banks, rose to 4.0% from 3.5% Tuesday.
Currency
The dollar declined broadly in world trading as dealers took profits and stepped to the sidelines to await Friday’s U.S. unemployment report.
“Trading was influenced by technical factors rather than any fundamental” news, said Kevin Lawrie, director of foreign exchange at Bank of Boston.
He said traders are “not doing anything” ahead of the Labor Department’s release of January’s unemployment report.
In New York, the dollar closed at 1.582 German marks, down from 1.593 Tuesday. It fell to 125.56 Japanese yen from 126.15.
Commodities
Coffee futures slumped to new lows because of strong harvests and disarray among producing nations over limiting exports.
The March contract dropped 1.85 cents a pound. It has lost 11% of its value in the past three weeks on the Coffee, Sugar & Cocoa Exchange in New York.
On other markets, wheat was mostly higher, while other grains and soybeans declined; energy futures were mostly higher; livestock and meat were mixed, and precious metals were mixed.
Colombia already has a bumper coffee crop this year, and now Brazil may be producing more than anticipated.
Compounding the surplus is a disagreement over export quotas, which are under discussion now in London by members of the International Coffee Organization. The last quota agreement fell apart in 1989.
Coffee for delivery in March settled 1.85 cents lower at 68.90 cents a pound.
Gold prices declined 60 cents to $355.60 an ounce on New York’s Commodity Exchange. Silver rose 2.5 cents to $4.198.
In the energy market, prices were mostly higher on the New York Mercantile Exchange. Light, sweet crude oil closed up 23 cents at $19.50 a barrel.
Market Roundup, D12
