Dow Falls 6.48, but Bond Prices Bounce Back : Market Overview
Highlights of Monday’s market activity, compiled from Times staff and wire reports:
* Treasury bond prices climbed as investors re-evaluated Friday’s employment report and went after bargains. The price of the Treasury’s closely watched 30-year bond rose 21/32 point, or $6.56 per $1,000 in face amount. Its yield, which falls when prices rise, was 7.87%, down from 7.93% Friday.
* Stocks closed mixed in aimless trading as investors took to the sidelines ahead of today’s Super Tuesday presidential primary elections in 11 states. The Dow industrial average slipped 6.48 points to 3,215.12.
Credit
Bond traders apparently came to the conclusion that growth in jobs was not so strong as to preclude the Federal Reserve from easing interest rates to stimulate the economy. Lower rates generally boost bond prices.
Friday’s February employment report showed the jobless rate 0.2 percentage point higher at 7.3%. The report also said employers expanded their payrolls by an unexpectedly high 164,000 jobs.
“After a weekend, you get a different spin on it,” Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc., said of the reassessment of the report. “If you look further in the numbers, you see the labor force setting is not as strong as 64,000 gains.”
Flanagan added that Treasury securities appeared attractive to buyers at their current prices.
Bond yields fell across the board; trading was light, in contrast to heavy, volatile bidding Friday after release of the job data.
Also Monday, the Treasury sold $11.4 billion in three-month bills at an average discount rate of 4.02%, unchanged from last week. Another $11.4 billion in six-month bills was sold at an average discount rate of 4.13%, up from 4.10%.
The fed funds rate, the rate on overnight loans between banks, rose to 3.88% from 3.75% Friday.
Stocks
Some analysts believe that the stock market will retreat if Republicans again send President Bush a negative message about the economy by giving conservative rival Patrick J. Buchanan a bigger-than-expected share of the vote.
“People want to see how those elections turn out,” said Kenneth Ducey at BT Brokerage. “They are backing off to see if any disasters come out” of today’s vote.
Still, advancing issues slightly outnumbered declines Monday on the New York Stock Exchange, 870 to 837. Big Board volume fell to 160.84 million shares from Friday’s 192.34 million. It was the lightest total since Dec. 26.
A gauge of broader market movements, the Standard & Poor’s 500 index, rose 0.77 point to 405.21. But the NASDAQ composite index of smaller stocks slipped 0.13 point to 615.82.
“The market has not really made up its mind which way to go,” Ducey added. “That leads me to believe that it will do a little worse for the rest of the week.”
One encouraging sign was a rally in utility stocks. A rising trend in those issues often heralds lower interest rates. The Dow utility average gained 1.88 points, or 0.9%, to 204.43.
Among active issues Monday:
* Coca-Cola gained 1 5/8 to 80 1/8. The company said its share of the international soft drink market grew to 49% in 1991 from 46% in 1990. It also reported plans to resume operations in India that had been shut down since 1978.
* Many other popular growth stocks of 1991 followed Coke higher. The stocks have been beaten down in recent weeks. Philip Morris climbed 1 1/4 to 76, Merck added 1 3/8 to 151 3/8 and biotech giant Amgen gained 1 1/4 to 62 1/4.
* Federal Home Loan Mortgage Corp., or Freddie Mac, rose 2 7/8 to 122 7/8. PaineWebber analyst Gary Gordon reiterated an upbeat rating on the agency and also rated its sister organization, Federal National Mortgage, a buy. Fannie Mae edged up 1 1/2 to 64.
* Other financial stocks gaining ground as interest rates fell included Coast Savings, up 3/8 to 9 7/8; CenFed Financial, up 3/4 to 13, and Countrywide Credit, up 1 3/4 to 33 7/8.
* Industrial stocks were mostly lower. Cooper Tire fell 1 1/8 to 49 7/8, Cummins Engine lost 1 5/8 to 62 1/4, Alcoa dropped 1 5/8 to 67 7/8 and Goodrich gave up 1 3/4 to 46 1/8. But Litton Industries gained 2 3/8 to 97 3/8, nearing the 52-week high of 98 3/4 it reached in January.
* American Stores, parent of Lucky grocery stores, plunged 3 1/4 to 32. The company reported sharply lower quarterly earnings. Also, reporting a drop in earnings was L.A.-based food wholesaler Rykoff-Sexton, which slid 1 1/2 to 19.
In London, the Financial Times 100-share average finished up 17.6 points at 2,550.7. Frankfurt’s DAX average rose 4.30 points to 1,750.25. Tokyo’s 225-share Nikkei average dropped 195.31 points to 20,797.68.
The Mexico City market slipped again. The Bolsa index fell 0.5% to 1,784.76.
Currency
The dollar settled mostly lower in quiet profit taking on world currency markets.
Analysts said it was poised for a technical decline. “It was time for a little pullback,” said John Marchese, economist at Pegasus Econometric Group in Hoboken, N.J.
“We’ve had an economy that’s strengthening, and that’s given the dollar a boost of about 8% in the last six weeks,” he said.
In New York, the dollar closed at 1.662 German marks, down from 1.669 Friday. It rose to 131.96 Japanese yen from 131.85.
The British pound climbed to $1.725 from $1.719.
Commodities
Wheat futures prices rose sharply on the Chicago Board of Trade amid prospects for overnight frost damage in winter wheat growing areas.
Corn futures also rose, while soybean and oat futures were mixed. On other commodity markets, cattle futures rose and pork futures, energy futures and precious metals were mixed.
Wheat for delivery in March rose 8.50 cents to $4.115 a bushel, the March contract’s highest daily settlement since Feb. 26.
March corn rose 4.25 cents to $2.715 a bushel, March oats rose 0.25 cent to $1.528 a bushel, and March soybeans ended 1.25 cents higher at $5.925 a bushel.
Meanwhile, energy futures ended mostly higher on the New York Mercantile Exchange, with light, sweet crude for April delivery up 16 cents to $18.67 a barrel.
Gold futures slipped below $350 an ounce to a new 4 1/2-year low in dull trading on New York’s Commodity Exchange. Gold for April delivery fell 60 cents to $349.70 an ounce, and March silver rose 0.5 cent to $4.157 an ounce.
Market Roundup, D12
