Overseas Declines Help Push Dow Down 30.80 : Market Overview

Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:

* The stock market fell sharply again, resuming a slide caused by heavy overseas losses, earnings disappointments and a weak dollar.

* The Dow Jones industrial average tumbled 30.80 points to 3,277.61. It was the third big loss in four sessions, broken only by Tuesday’s modest 5.41-point rise.

* Treasury bond prices rose after Federal Reserve Board Chairman Alan Greenspan told a House panel that long-term interest rates had room to fall. The yield on the Treasury’s bellwether 30-year bond was 7.61%, down from 7.66% late Tuesday.

Stocks

Gloom settled over the stock market as foreign shares tumbled again. The Tokyo market tumbled overnight to a six-year low as measured by the Nikkei 225-share average, which fell 2.88%.

“Today’s focus was the foreign markets, and there was conjecture about what would happen to (Iraqi leader) Saddam Hussein,” said George Pirrone, a senior trader at Dreyfus Corp.

Stocks have been sliding worldwide. In Tokyo, the Nikkei shed 460.46 points to 15,541. London’s Financial Times 100-share average plunged 27.7 points to 2,387.9. In Frankfurt, the 30-share DAX average dropped 31.55 points to 1,628.22, its lowest close since Jan. 16.

Analysts said the selloffs reflected widespread uneasiness over the outlook for growth in the industrialized economies.

In the broader American market, declining issues beat advancing shares 1,056 to 645 on the New York Stock Exchange. Volume was 191.84 million shares, compared to 173.76 million Tuesday.

In testimony before a House Banking subcommittee, Greenspan said that if inflationary worries could be “purged from the system,” long-term rates “have a good way to go down.”

Greenspan also gave a lift to bond prices when he said that Fed officials are willing to lower money-supply targets. The market read that statement as anti-inflationary.

At the same time, U.S. investors have been coping with skittish market responses to corporate earnings reports for the second quarter. Earnings disappointments prompted selling of several high-technology stocks Wednesday.

* For instance, Amdahl, traded on the American Stock Exchange, fell 1 3/4 to 15 5/8. It posted second-quarter earnings of 15 cents a share, which was below expectations although it was higher than the 6 cents a share in the 1991 quarter.

* Symantec, the most active NASDAQ stock, tumbled 7 to 20 3/4. Late Tuesday the company announced quarterly profit that was short of some analysts’ hopes.

* Advanced Technology Laboratories, which posted lower quarterly earnings, plunged 8 3/4 to 16 5/8.

* Among NYSE issues, Symbol Technologies fell 3 3/8 to 14 5/8 after announcing a quarterly earnings increase that was smaller than the Street had been expecting.

* Amoco dropped 1 3/8 to 48 3/4. The company reported a $478-million second-quarter loss, versus a profit in the period last year.

* International Business Machines, which has been under pressure since an earnings disappointment last week, lost 1 1/4 to 92 1/2. Last Thursday the stock traded briefly above 100.

* On the plus side, Upjohn rose 1 1/2 to 33 7/8 in active trading. The company said its researchers have synthesized a compound that is more potent in blocking growth of the HIV virus than currently approved drugs.

* Compaq Computer climbed 3 to 27 5/8. The company posted higher second-quarter earnings and said it reached midyear with a “considerable” backlog of orders for its personal computer products.

* Computer Associates International, also among the volume leaders, was up 2 1/8 at 13 3/4. Profit for the fiscal first quarter ended June 30 came to 11 cents a share, up from 7 cents in the period a year earlier.

Credit

Convinced that Greenspan’s comments would push long-term rates lower and prices higher, investors sold 5-year securities and bought 30-year bonds, said Kathleen Camilli, chief economist at Maria Ramirez Capital Consultants.

The 30-year bond’s price, which rises when rates fall, was up 19/32 point, or $5.93 per $1,000 in face amount.

Prices were also boosted by reports that the Fed was buying bonds for the account of a foreign central bank.

The federal funds rate, the interest on overnight loans between banks, rose to 3.5% from 2.75% Tuesday.

Currency

The dollar was mixed in sluggish trading, with money traders apparently worried that central banks might bludgeon them again in supporting the U.S. currency.

Kevin Logan, chief economist in the New York branch of Swiss Bank Corp., said Greenspan’s comments that the dollar should not fall much further “just reminded everybody the central bank is out there.”

On Monday, the Fed and several other central banks intervened in currency markets, purchasing dollars and selling German marks. The mark had been rising because of a hike in German interest rates last week.

The dollar fell to 1.485 marks in New York from Tuesday’s 1.487. It closed at 126.625 Japanese yen, up from 125.25. The British pound fell to $1.907 from $1.910.

Commodities

Light, sweet crude oil futures settled higher on the New York Mercantile Exchange as traders reacted to bullish inventory reports and increased tension in Iraq.

Heating oil and gasoline futures also were higher.

On other markets, grain and soybean futures were mixed, precious metals prices were higher, livestock and meat futures were mixed and cocoa futures surged.

The September crude oil contract was 29 cents higher at $21.84 a barrel on American Petroleum Institute data showing that stocks for the week ending July 17 declined by 6.14 million barrels.

Crude prices also got a boost from Iraq’s refusal to allow United Nations inspectors to examine its armament facilities under terms ending the Persian Gulf War.

Elsewhere, August gold climbed $1.30 to $358.90 an ounce on New York’s Commodity Exchange. July silver was 3.2 cents higher at $3.969 an ounce.