Bargain Hunting Helps Dow Climb 4.82 : Market Overview
Highlights of Tuesday’s market activity, compiled from Times staff and wire reports:
* Stocks rose modestly, helped by bargain hunting among some classic growth issues. The Dow Jones industrial average edged up 4.82 points to 3,285.62.
* Oil prices inched higher as traders continued to doubt that Iraqi oil will hit the world market in great quantities soon.
Stocks
Despite ongoing worries about the economy, investors were lured back to some key stock groups by the perception of bargain prices. Food, biotech and retail stocks were sharply higher, and the market traded in positive territory for most of the day.
“The market got oversold” in recent days, said Dudley Eppel, trader at Donaldson, Lufkin & Jenrette Securities Corp. “Some stocks were too far down and that created buy interest.”
Wall Street also gained support Tuesday from a stabilization overnight in stocks abroad.
In Tokyo, the Nikkei index closed up 185.77 points Tuesday, and was up 113 points to 16,219.99 at midday today. London’s Financial Times 100-share average added 10.3 points to 2,560.6, and Frankfurt’s DAX index rose half a point to 1,771.14.
On the New York Stock Exchange, advancing issues outnumbered declines 11 to 8 as volume rose to 190.85 million shares from 169.63 million Monday.
Analysts noted that investors were most interested in stocks of companies that have in the past supplied steady earnings growth. Those stocks had lagged for much of this year as investors sought industrial stocks whose earnings were expected to explode with the economic recovery.
But as doubts rise about the recovery’s strength, many industrial issues are waning.
Today’s government release of May durable goods orders could provide a boost for industrial stocks, however: A strong report could encourage new optimism about industrial companies’ second-quarter earnings, to be reported in July.
Among the market highlights:
* Food stocks rallied briskly. Campbell Soup gained 1 1/2 to 34 7/8, General Mills leaped 1 5/8 to 66 1/8, Hershey added 3/4 to 41, Quaker Oats was up 1 3/8 to 54 7/8 and Sara Lee jumped 1 3/8 to 49. But Kellogg fell 1/4 to 64 1/2 after New York state’s agriculture commissioner said rodent hairs were found in some batches of the firm’s strawberry Pop Tarts.
* Retailers gained, apparently on optimism about June sales. Private forecaster Johnson Redbook issued an encouraging report on June retail business. J.C. Penney rose 1 3/4 to 70 1/4, Home Depot leaped 1 3/8 to 67 3/4, Dillard added 3/4 to 35 5/8 and Melville gained 1/2 to 44 1/4.
But Nordstrom dropped 1 1/4 to 28. After the market closed, the firm said same-store sales this quarter are running below levels of the first quarter.
* Biotech stocks, among the most hammered issues this year, saw new life. Immune Response rose 1 1/2 to 21 1/2, Amgen added 1 to 57, Immunex jumped 2 to 29 1/2 and Gensia was up 1 1/2 to 34 3/4.
* Though many industrial stocks languished, some bounced up. Eaton rose 2 to 79 1/4, GM Hughes jumped 7/8 to 24 7/8, Inland Steel was up 5/8 to 25 5/8 and Goodyear leaped 2 1/4 to 67.
* Earnings disappointments continued to take their toll. Graphics-software firm Aldus plummeted 4 5/8 to 13 after saying second-quarter earnings will be break-even or less--the firm’s fourth straight earnings shortfall.
Other companies signaling poor earnings reports ahead included oil recycler International Recovery, down 6 5/8 to 12 3/8, and mini-conglomerate Nacco Industries, which fell 5 3/4 to 46 1/4. Nacco, which makes forklifts and other machinery, said tough business conditions in Europe were hampering profits.
* AES, an operator of power-generation facilities, plunged 9 1/2 to 17. It told the EPA that employees had altered water discharge reports at an Oklahoma facility.
* Telmex, the Mexican phone company, eased 1/4 to 44 5/8 in NYSE trading as the Mexican stock market stabilized. The market’s Bolsa index added 4.15 points to 1,628.49.
Credit
The price of the Treasury’s main 30-year bond slipped 3/32 point, or 94 cents per $1,000. Its yield held at 7.84%, same as Monday.
Decent demand at the Treasury’s auction of two-year notes helped sentiment early in the day. The notes’ average yield was 5.11%.
But some traders began to sell bonds in the afternoon, after the Johnson Redbook report on retail sales suggested that the economy may be stronger than believed.
The fed funds rate, the rate on overnight loans between banks, was 3.50%, versus 3.81% Monday.
Currency
The dollar settled mixed in light, uneventful dealings.
“People are just waiting for more impetus to trade,” said Kevin Lawrie, trader at Bank of Boston. Some direction could come today with the release of May durable goods orders. A strong report would be bullish for the dollar.
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.
Commodities
Oil futures rose moderately on the New York Merc, adding to Monday’s 22-cent-a-barrel gain.
Light, sweet crude for August rose 11 cents to $22.59 a barrel.
Traders were encouraged after Iraq said it was too soon to predict whether a deal could be struck with the United Nations on conditions for resuming Iraqi oil exports.
Elsewhere, gold for June delivery ended 80 cents higher at $344.50 an ounce on New York’s Comex, continuing to gain on worries about South African unrest. July silver eased 0.5 cent to $4.03.
