Dow Falls 34.21 as Interest in Buying Falters : Market Overview
Highlights of Tuesday’s market activity, compiled from Times staff and wire reports:
* The stock market posted a broad decline as many worried investors stayed on the sidelines waiting for key government economic reports due out later this week. The Dow Jones average of 30 industrials fell 34.21 points to 3,369.92.
* Treasury bond prices retreated, mostly for technical reasons.
* The dollar settled mostly higher on world currency markets.
Stocks
Declining issues outnumbered advances by more than 2 to 1 on the New York Stock Exchange.
Volume on the floor of the Big Board came to 191.17 million shares, compared to 161.24 million in the previous session.
Traders attributed Tuesday’s losses more to a lack of buying interest than to heavy selling pressure. There was little news to move the market, they said.
“There has not been really strong buying interest for the last week or so,” said Michael Metz, a managing director with Oppenheimer & Co.
Investors were cautious ahead of May readings on retail sales and producer prices Thursday, as well as the May report on consumer prices Friday.
The data is expected to influence the Federal Reserve’s monetary policy.
They could lead to another cut in short-term interest rates, which would help stock prices. The Fed is under pressure to cut rates after data last week showed May unemployment rose to 7.5%, the highest level in eight years.
However, inflation concerns have crept back into the market in recent days, triggered by a weak dollar, as well as rising prices of grains and industrial materials, said Hugh Johnson, senior vice president at First Albany Corp.
Among the day’s highlights:
* Airline stocks were lower after Delta Air Lines on Monday led a round of price cuts. Delta fell 1 5/8 to 58 5/8, American Airlines’ parent, AMR Corp., tumbled 1 1/4 to 64 5/8 and United Airlines declined 1 to 117 7/8.
* Blue chips were mostly lower. Coca Cola fell 1/4 to 43 1/8, IBM fell 3/8 to 90 5/8, McDonalds declined 5/8 to 45 7/8 and Philip Morris fell 1 3/8 to 74 1/8.
* The most actively traded NYSE issue was Abbott Laboratories, unchanged at 27 3/4. The company said Monday that it will take a charge against second-quarter earnings to cover costs associated with taking a new antibiotic off the market.
* Among other actively traded NYSE issues were Telefonos de Mexico, down 5/8 at 54 1/4; Bristol-Myers Squibb, which issued disappointing earnings news last week, down 1/4 at 64 1/2, and Chrysler, up 1/4 at 20 3/4.
* International Paper fell 2 3/8 to 64 7/8 after an analyst’s report reduced earnings estimates for the company and several other packaging-related firms.
* In NASDAQ over-the-counter activity, Wetterau Inc. stock rose 6 3/8 to 30 3/8 after Super Valu Stores said it will buy the supermarket chain. Hutchinson Technology fell 4 1/2 to 15 3/4 after the company said third-quarter earnings will be down.
In overseas trading, London stocks declined, with the Financial Times-Stock Exchange list of 100 issues down 10.4 points at 2,635.4.
In Frankfurt, the 30-share DAX index declined 2.81 points to 1,786.26.
In Tokyo, the 225-share Nikkei average was up 189.98 points, or 1.08%, to 17,845.04.
Credit
The price of the Treasury’s main 30-year bond dropped 13/32 point, or $4.06 per $1,000 in face amount Its yield rose to 7.88% from 7.84% late Monday.
Analysts said the market was fairly quiet in the absence of economic news, and there was little movement in morning dealings.
But bonds fell in the afternoon on technical factors related to trading of two-year notes and selling in the bond futures market, said William V. Sullivan, director of money market research at Dean Witter Reynolds Inc.
Also, he said a weekly survey by Johnson Redbook indicated that department store sales rose in the week ended Saturday.
That would show an improving economy, which would lessen the chance that the Federal Reserve will lower interest rates.
The federal funds rate, the interest on overnight loans between banks, was quoted at 3.000%, down from 3.625% late Monday.
Currency
Most traders were focused on the German mark.
Analysts said the dollar came under pressure early in the session as the German mark firmed. But as the day wore on, the mark weakened, and the dollar benefited.
“It was kind of a cross-driven day,” said John McCarthy, chief dealer at ABN-AMRO Bank, referring to the heavy activity centered on trades involving the mark and the other European currencies.
The mark has drawn continual strength from Denmark’s rejection last week of the Maastricht treaty for European political and economic union. Germany is perceived to have the best chance for independent economic survival should attempts to unify the European bloc fail.
But the mark fell Tuesday on profit taking and amid confusion about what will happen following Denmark’s action, McCarthy said.
Late dollar rates in New York, compared to late Monday’s rates included 1.5915 German marks, up from 1.5875; 1.4550 Swiss francs, up from 1.4490; 5.3550 French francs, up from 5.3495; 1,204.00 Italian lire, up from 1,201.00, and 1.1924 Canadian dollars, down from 1.1942.
Commodities
Rain in the nation’s wheat fields continued to delay harvesting and sent futures prices surging higher on the Chicago Board of Trade.
A two-week rally has added more than 10%, or 35 cents a bushel, to the July wheat contract.
“Every day wheat stays in the field past ripening, even if it’s dry, is bad,” said O. H. Williams, an extension agronomist in Cordell, Okla.
And it’s been anything but dry.
Tuesday was the 26th consecutive day of rain in the wheat fields of Oklahoma, where the crop is beginning to mold or sprout in the head because it’s too muddy to get the harvesting equipment into the fields.
Wheat for delivery in July settled 7 cents higher at $3.76 1/2 a bushel; July corn was 1/2 cent higher at $2.64 a bushel; July oats were 3 1/4 cents higher at $1.45 1/2 a bushel, and July soybeans were 8 1/2 cents higher at $6.30 a bushel.
Energy futures were mostly lower on the New York Mercantile Exchange.
Light, sweet crude oil for July delivery was 12 cents lower at $22.32 a barrel.
Precious metals were unchanged to a little higher at New York’s Commodity Exchange. Gold for delivery in June was 10 cents higher at $338.30 an ounce; July silver was unchanged at $4.048 an ounce.
Market Roundup, D6
