Dow Ignores New Hampshire Results, Climbs 5.59 on Economic Reports : Market Overview
Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:
* Stocks closed mixed, as blue chip issues rose on continuing hopes for a recovering economy, while small stocks eased. The Dow Jones industrial average rose 5.59 points to close at 3,230.32 after Tuesday’s 21-point loss.
* Treasury bond yields fell sharply after a favorable inflation report. The yield on the Treasury’s key 30-year bond dropped to 7.91% from 7.98% Tuesday.
Stocks
The stock market showed no major reaction to President Bush’s narrower-than-expected victory in the Republican primary in New Hampshire.
Nonetheless, the broad market remained weak, as declining issues outnumbered advances by about 5 to 4 on the New York Stock Exchange. Big Board volume came to 232.90 million shares, down from 233.78 million Tuesday.
Investors continued to focus on economic news. The government announced that its consumer price index rose 0.1% in January, lower than most economists expected. Also, housing starts rose a strong 5.5% in January.
The news heartened investors who are hoping for a bona fide economic recovery this year, yet one with low inflation that will allow interest rates to remain low or decline further.
As for New Hampshire, “I don’t think it was a serious vote for Buchanan. A lot of people are saying ‘I’m fed up.’ (Bush) just needs a strong economy by election time, and he has a lot of options,” said John McElroy, principal at 1838 Investment Advisers.
Among the market highlights:
* Industrial issues that would benefit from a recovery continued to dominate the market leaders’ list. Georgia-Pacific jumped 2 1/2 to 71 1/8, Weyerhaueser gained 1 1/4 to 33 3/4, Alcoa added 1 1/8 to 71 5/8, truck maker PACCAR jumped 2 1/2 to 59 3/4, Ford rose 1 1/4 to 38 1/8, and Inland Steel was up 1 to 25 3/8.
Also, computer firm Hewlett-Packard soared 9 1/8 to 73 1/2 after it reported sharply higher quarterly earnings.
* On the downside, many health care stocks fell further as investors moved away from the growth stocks that have dominated the market for three years.
In biotech, Centocor plunged 8 1/8 to 33 1/8 on the NASDAQ market, helping to drag the NASDAQ composite index down four points to 622.41. Centocor said the FDA raised new concerns about a pending drug used in treating blood infections.
Among Big Board-listed drug stocks, Merck dropped 1 7/8 to 144 1/8, Pfizer lost 7/8 to 69 3/8, and Upjohn sank 1 1/8 to 40.
* Casino stocks rocketed after Caesars World estimated sharply higher earnings for its second fiscal quarter ended Jan. 31. Caesars rose 1 1/2 to 38 3/8, Mirage gained 2 to 34 3/4, and Showboat jumped 1 7/8 to 13 1/8.
* Among Southland issues, aerospace firm Rohr tumbled 2 to 18 1/8 on news of a federal probe into the firm’s operations. Mortgage banker Countrywide Credit slid 3 1/2 to 35 3/8, but the firm said it had no news.
Also, CalFed added 1/2 to 4, continuing to move up on speculation that the government may begin an assistance program for some troubled S&Ls.;
Overseas, stocks slumped again in Tokyo, with the Nikkei average down 253.73 points to 20,618.30.
The London Stock Exchange’s two-day rally fell apart. The Financial Times 100-share average ended 19.2 points lower at 2,536.7.
In Frankfurt, the DAX average fell 7.20 points to 1,687.79.
Credit
The rally in bonds sent the 30-year Treasury bond’s price up $7.81 per $1,000 in face amount, finally halting the bond selloff that mushroomed last week.
Yields fell across the board, except on short-term T-bills, which inched up.
Analysts said bond investors were cheered by the low January inflation report and by comments by Federal Reserve Chairman Alan Greenspan, who said that inflation appears under control. That seems to leave the door open for further interest rate declines, many bond players believe.
The federal funds rate, the interest on overnight loans between banks, was quoted at 4.00%, down from 4.25% Tuesday.
Currency
The dollar settled lower against all major currencies except the Japanese yen in thin trading.
Analysts said currency traders were not particularly inspired by the latest economic data, which was better than expected.
“The market took it all in stride,” said Randolph Donney, research director at Pegasus Econometric Group in Hoboken, N.J.
“The market is waiting to see if its recent move up is legitimate,” Donney said, which would be supported by signs that “the economy is really starting to come out of recession.”
The dollar’s move above 128 Japanese yen did not trigger any intervention by the central banks. That “emboldened speculators to test the dollar’s upside,” said Marc Chandler, an analyst with the advisory firm IDEA.
Still, the currency held to a relatively narrow range throughout the session.
In New York, the dollar settled at 128.20 yen, up from 128.00 yen on Tuesday.
Against the German mark, the dollar eased to 1.643 from Tuesday’s 1.644.
The British pound rose $1.757 from Tuesday’s $1.755.
Commodities
Wheat prices pulled out of a nose-dive and ended with a modest gain on a report that the former Soviet republics were buying wheat futures.
Such activity, rare in the past year, could indicate that the Commonwealth of Independent States was locking in prices for future wheat purchases, analysts said.
On other commodity markets, energy futures rose; livestock and meat futures fell, and precious metals edged lower.
Wheat for delivery in March finished 0.25 cent above Tuesday’s settlement at $4.12 a bushel after trading as low as $4.02 during Wednesday’s session.
March corn rose 0.75 cent to $2.645 a bushel; March oats fell 3 cents to $1.55 a bushel, and March soybeans rose 4.75 cents to $5.773 a bushel.
Meanwhile, oil futures recovered some of Tuesday’s sharp losses on the New York Mercantile Exchange, with light, sweet crude oil for March delivery rising 29 cents to $18.41 a barrel.
Oil had slumped $1.34 a barrel on Tuesday on new worries about a supply glut.
Gold fell 40 cents to $353 an ounce, and silver slipped 0.3 cent to $4.06 an ounce on New York’s Commodity Exchange.
Market Roundup, D8
