Bargain Hunting Helps Dow Climb 4.82 : Market Overview
Highlights of Tuesday’s market activity, compiled from Times staff and wire reports:
* Stock prices rose modestly, helped by bargain hunting among growth issues, end-of-quarter buying and rallies in overseas markets. The Dow Jones average edged up 4.82 points to 3,285.62.
* Bond prices closed little changed, the good news of a successful auction of two-year notes offset by signs of improving retail sales.
Stocks
Analysts said the stock market is still weighed down by uncertainties over second-quarter corporate earnings and the economy.
They said growth stocks, which have been among the weakest groups this year, attracted bargain hunters.
“It seems to be moving away from cyclicals and into the ones with more certain growth prospects,” said Jay McElroy at 1838 Investment Advisors L.P. Questions about the vigor of the recovery have tempted some investors to put money back into growth stocks.
The market also gained support Tuesday from a rebound overnight in stock prices abroad.
On the Tokyo Stock Exchange, the 225-share Nikkei average closed up 185.77 points, or 1.17%, at 16,106.99. On the London Stock Exchange the Financial Times 100-share average closed up 10.3 points at 2,560.6. In Frankfurt, the 30-share DAX average rose half a point to 1,771.14.
In the broader market, advancing issues outnumbered declines 11 to 8 on the New York Stock Exchange, on Big Board volume of 190.85 million shares, up from 169.63 million the day before.
“The market got oversold,” said Dudley Eppel, managing director of equity trading at Donaldson, Lufkin & Jenrette Securities Corp. “Some stocks were too far down and that created buy interest.”
“The basic direction of the market is sideways to down,” said William Dodge, chief investment strategist with Dean Witter Reynolds Inc.
Still worried about the strength of the recovery, second-quarter earnings and the presidential election, investors are looking for direction, traders said. That is keeping interest muted, they said.
“People are looking for reasons to buy or sell,” said Richard Myers, head trader with Ladenburg, Thalmann & Co.
The release today of figures on durable goods orders could provide clues about the economy, analysts said. Meanwhile, the latest figures on company earnings are due out in mid-July.
Among market highlights:
* The most actively traded issue was American Telephone & Telegraph, up 1/2 at 42 1/2.
* Another active issue was Telefonos de Mexico, which fell 1/4 to 44 5/8 on concerns about the health of Mexican stocks.
* Merck fell 1 to 49 1/2 after the Wall Street Journal said the company could face problems marketing its new prostrate drug. The stock gained 2 1/4 Monday on news that the Food and Drug Administration had approved the drug.
* International Recovery fell 6 5/8 to 12 3/8 after saying it expects lower earnings, and Nacco Industries fell 5 3/4 to 46 1/4 on a forecast of lower profits.
* Blue chips were mixed. IBM rose 5/8 to 95 7/8, Coca-Cola fell 1/8 to 40 1/8, General Electric rose 1/8 to 76 3/8 and Bristol-Myers Squibb fell 3/8 to 66 3/8.
* In NASDAQ trading, Aldus dropped 4 5/8 to 13 on expectations of lower earnings. AES plunged 9 1/2 to 17 after notifying the Environmental Protection Agency that employees had altered water discharge reports at a facility in Oklahoma.
Credit
The price of the Treasury’s main 30-year bond slipped 3/32 point, or 94 cents per $1,000 in face amount. Its yield rose to 7.84% from 7.835% Monday.
In the absence of economic news, traders focused in the morning on an auction of a record $15 billion in two-year Treasury notes. Economists said it drew decent demand, pushing up prices.
But the market fell in the afternoon after the Johnson Redbook report on retail sales showed month-to-month gains between April and June of 2%, suggesting that some components of retail sales were rising.
Currency
The dollar settled mixed in light, uneventful dealings on world currency markets.
Traders began selling the dollar sporadically in foreign markets overnight. When activity shifted to domestic markets, many were inclined to take profits chalked up in the previous session.
Sentiment toward the U.S. currency has been bearish recently as traders turn their attention toward Europe. Speculation about the ultimate success of European political and economic union has dominated trading since Denmark’s surprise rejection of the Maastricht treaty this month.
The dollar gained across the board Monday but not for any fundamental reason.
“People are just waiting for more impetus to trade,” said Kevin Lawrie, director of foreign exchange at Bank of Boston. Some direction could come today with the release of durable goods orders.
The dollar dipped in New York to 1.566 German marks from 1.567 Monday. It rose to 127.28 Japanese yen from 127.15.
The British pound was $1.863, up from Monday’s $1.862.
Commodities
Soybean futures prices rose strongly on the Chicago Board of Trade, driven by speculative fund buying and forecasts of a return to dry weather next week in the Midwest.
On other commodity markets, coffee futures sank to another 19-year low; crude oil advanced; precious metals were mixed; and livestock and meat futures were mixed.
Gold ended slightly higher and silver slightly lower on New York’s Commodity Exchange after a rally in the gold market tied to South African turmoil faltered. Gold for June delivery ended 80 cents higher at $344.50 an ounce. July silver fell 0.5 cent to $4.033 an ounce.
