Dow Gains 15 on ‘Triple Witching Hour’ : Market Overview
* Stocks staged a modest advance despite considerable turmoil in the government bond market and powerful technical forces in the stock market. The Dow Jones industrial average gained 14.99 to close at 3,276.39. For the week, the Dow index rose 40.48 points.
* Treasury bond yields rose Friday as a number of factors apparently combined to prompt investors to sell the securities.
* The dollar ended slightly higher Friday after a hectic session in which it soared to a new 1992 high but fell back on news that Iraq had agreed to destroy Scud missile equipment.
Stocks
The Dow’s close was the seventh-highest for the index, surpassing the close of 3,275.27 on March 2, 1992. But the index was below the all-time record of 3,290.25 set on March 3.
Advancing issues outnumbered declines by about 6 to 5 on the New York Stock Exchange.
Big Board volume was extremely heavy, with 246.71 million shares changing hands against 197.28 million in the previous session.
The heavy volume was linked to the expiration of stock options and index futures, known on Wall Street as the “triple witching hour.” The expirations in the past have caused dramatic swings in prices as traders seek to cover technical trading positions.
For example, an unusual number of blue chip companies reported trades of large blocks of stock in the session’s first half-hour. That’s usually a sign that large institutional investors are adjusting their stock portfolios, said Gene Mintz, deputy manager at Brown Bros., Harriman & Co.
Among the market highlights:
* Auto stocks were mixed after a leading brokerage firm upgraded its rating of the Big Three U.S. auto makers. Chrysler was down 1/2 at 17 7/8; Ford Motor, up 3/8 at 40 1/2, and General Motors, up 3/4 at 39 1/8.
* Leading the NYSE’s list of actively traded stocks was American Telephone & Telegraph, up 3/4 at 40 5/8 on heavy volume. The Internal Revenue Service awarded a disputed $1.4-billion computer contract to AT&T; over the objections of International Business Machines and Lockheed Missiles & Space Co. Later, two analysts recommended buying of the company’s shares.
* Other active issues included Glaxo, up 1/2 at 26 3/4; RJR Nabisco, down 1/8 at 9 5/8, and Exxon, down 1/2 at 54 7/8.
* On the American Stock Exchange, Chambers Development Class A stock fell 3/8 at 10 1/4 in active trading after word that the Securities and Exchange Commission was investigating selling of Chambers’ stock last week. Shares of the garbage hauler and security company fell more than 65% on Wednesday after announcing that a special charge cut 1991 earnings to 3 cents a share from an initial forecast of 83 cents.
* Allied Signal rose 3 at 52 3/8 after releasing a favorable forecast for its first-quarter earnings. The aerospace and automotive technology concern predicted first-quarter earnings in the range of 85 cents a share, against 47 cents in comparable period in 1991.
* Unisys fell 1/4 at 9 7/8 after the Pennsylvania computer maker announced plans to settle remaining shareholder lawsuits related to its involvement in a U.S. Defense Department procurement scandal.
* Preferred Health dropped 3 5/8 at 13 3/8 after the company told analysts that it expects 1992 earnings won’t meet previous expectations.
Overseas, London stocks fell, with the Financial Times 100 index down 11 points at 2,456.6 and 19.4 points below its level a week ago. In Frankfurt, the 30-share DAX rose 11.67 points to 1,736.60, just ahead of last Friday’s closing of 1,732.64.
In Tokyo, the market was closed for a holiday and will reopen on Monday.
Credit
The yield on the Treasury’s bellwether 30-year bond rose to 8.04% from 7.96% late Thursday. Its price, which moves in the opposite direction from yield, fell 7/8 point, or $8.75 per $1,000 in face amount.
Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc., said it was unclear why prices dropped. “Everyone is sort of reaching for an answer today,” he said.
One factor analysts cited was concern that a tax-cut package under consideration by Congress could inflate the federal deficit. That could require more government borrowing, which tends to depress the value of existing Treasury securities.
Democrats in Congress negotiated a compromise tax cut bill, and Congress later approved it. But President Bush vetoed the measure late Friday afternoon.
Yields on three-month Treasury bills rose to 4.15% as the discount gained 1 basis point to 4.06%. Yields on six-month bills rose to 4.37% as the discount rose 1 basis point to 4.23%. Yields on one-year bills rose to 4.71% as the discount rose 4 basis points to 4.50%.
A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, paid at maturity.
The federal funds rate, the interest on overnight loans between banks, was quoted at 3 3/4%, down from 4 1/8% late Thursday.
Currency
The dollar climbed to a high of 1.6860 German marks before losing nearly 1 1/2 pfennigs to close at 1.6710 marks, just above a Thursday close of 1.6705. The dollar’s previous 1992 high was 1.6805 marks on March 5.
Against the Japanese yen, the dollar closed at 133.80 yen, compared to 133.55 on Thursday. The dollar climbed against the Swiss franc to 1.5175 francs from 1.5145 francs. Against the French franc, the dollar ended at 5.6720 francs, compared to a previous 5.6700. The British pound climbed to $1.7130 from $1.7110.
Commodities
Soybean prices collapsed Friday as speculative commodity funds launched a wave of panic selling and broke the back of a short-lived rally.
May soybeans plummeted 13.5 cents to close at $5.855 a bushel, down from a high of $6.0175 at the Chicago Board of Trade.
April gold fell 60 cents to $338.50 on New York’s Commodity Exchange.
Market Roundup, D6
