Dow Rebounds From Salomon Goof, Rises 8.28 : Market Overview
* Wall Street blue chips closed modestly higher, regaining ground lost in the previous session when Salomon Bros. mistakenly sold a huge block of stock. The Dow Jones industrial average rose 8.28 points to 3,267.67.
* In the credit markets, bond prices were lower despite new data showing an increase in first-time unemployment claims and a sluggish economy in the final three months of last year. The yield on the Treasury’s bellwether 30-year bond rose to 7.98% from 7.94% Wednesday.
Stocks
In the broader market, declining issues outnumbered advances by a narrow margin on the New York Stock Exchange.
Big board volume retreated to 176.72 million shares from Wednesday’s 192.65 million.
A last-minute computer-driven program trade from Salomon Bros. on Wednesday erased a 15-point gain in the Dow average, knocking the index down to a loss of 1.57 points for the day.
A Salomon clerk mistakenly punched in an order for 11 million shares of stock rather than $11 million worth, according to the company and industry sources.
Analysts said the market rebounded Thursday after Salomon said it would buy back the shares over several sessions.
Despite the Dow’s strength, sentiment remained weak in the broader market. Over-the-counter stocks lagged, pressured by declines among technology issues. The NASDAQ composite index shed 4.08 points to 615.40.
Don R. Hays, head of investment strategy at Wheat, First Securities Inc. in Richmond, Va., said stock buyers found little excitement in the economic reports released Thursday. The Labor Department reported that 15,000 people trekked to unemployment offices for the first time in the week ended March 14, bringing new claims for jobless benefits to 447,000.
Later, the Commerce Department said the output of goods and services in the October-December period last year grew by 0.4%, below original forecasts.
Technical buying helped support the Dow Jones average at the opening and closing, traders said. The Dow’s quick rise of about 15 points at opening was a rebound from the fast sell-off Wednesday because of Salomon Bros.’ botched computerized order.
Among the market highlights:
* Natural gas stocks showed signs of life, with Chevron edging up 1/4 to 63 3/4, Anadarko Petroleum rising 3/4 to 21 3/8 and Apache climbing 1/2 to 13 1/2.
* American Express rose 1/2 to 24. Smith Barney analyst Alison Deans upgraded her recommendation on the company.
* Glenfed dropped 1 7/8 to 3 1/2. Dean Witter Reynolds analyst E. Gareth Plank cut his rating on the thrift company, which said Wednesday that it will post a big loss in the current quarter.
* Quaker Oats rose 1 to 55 1/2. PaineWebber analyst Roger Spencer cut his earnings estimates for the food company.
* Some popular growth stocks were hit as nervous traders cashed in profits. Merck lost 2 to 148; Glaxo was down 1 1/8 to 27 1/2, and RJR Nabisco was unchanged at 9 3/4.
Overseas, the Tokyo Stock Exchange’s leading index fell back below the psychologically important 20,000-point level. The 225-issue Nikkei average dropped 341.29 points to 19,885.49.
Stock prices closed higher in London, bolstered by a string of good earnings reports. The Financial Times 100-share average ended up 7.3 points at 2,472.2.
In Frankfurt, the 30-share DAX index inched up 2.76 points to 1,719.02.
Credit
Traders sold longer-term bonds, speculating that a new report would show an improvement in consumer confidence.
The price of the bellwether 30-year bond fell 17/32 point, or $5.31 per $1,000 in face amount.
“It was an interesting day,” said Kevin Flanagan of Dean Witter Reynolds Inc. “The data should have supported the market but didn’t.”
He said prices fell in part on rumors that a University of Michigan report on consumer confidence would show further improvement.
The federal funds rate, the interest on overnight loans between banks, was 4.063%, up from 4% Wednesday.
Currency
The dollar rose against major currencies, driven higher mostly by technically motivated buying.
Its advance was more pronounced on European exchange markets than at home.
Still, it rose in New York to 1.661 German marks from Wednesday’s 1.652.
It finished at 134.03 Japanese yen, up from 133.45 Wednesday.
Commodities
Corn and wheat prices rose while soybeans slipped lower on the Chicago Board of Trade as the market awaited news about Russian grain purchases and the Agriculture Department’s planting report.
On other markets, coffee futures were mixed, hogs declined, most energy futures were higher and precious metals were mixed.
Grain and soybean prices opened higher on reports that the Commonwealth of Independent States was in the market for corn, soybeans and soybean meal. But the gains failed to hold.
Elsewhere, energy prices advanced on the New York Mercantile Exchange. Light, sweet crude oil for delivery in May was 9 cents higher at $19.28 a barrel.
Gold futures slipped on the Commodity Exchange in New York, with April gold losing 20 cents to $341.10 an ounce. March silver was 0.5 cent higher at $4.089 an ounce.
