Dow Slips 4.05 as Investors Wait for Signs : Market Overview
Highlights of Monday’s market activity, compiled from Times staff and wire reports:
* A late burst of computer-driven program selling smothered a modest rise in blue chip stocks, but many broader indexes closed higher. The Dow Jones industrial average eased 4.05 points to 3,324.89.
* Treasury bond yields closed mixed, with long-term yields rising on renewed worries about future federal spending. The yield on 30-year T-bonds closed at 7.36%, up from 7.31% Friday.
* Gold prices rose slightly, showing more signs of stabilizing after last week’s plunge.
Stocks
Investors adopted a wait-and-see attitude as the Republican Party’s convention got underway in Houston. Traders said many investors are anxious to see if President Bush unveils any new economic proposals.
The market is also focusing on today’s scheduled meeting of the Federal Reserve’s policy-making open market committee.
Despite pressure on the Dow index, advancing issues outnumbered declining ones about 9 to 7 on the Big Board. Volume came to 152.83 million shares, typically slow for a summer Monday.
Analysts said much of the buying may have been technical in nature, with the biggest gains in the stocks that have been pummeled the most in recent weeks.
Among the market highlights:
* Transportation stocks, which have slumped lately on economic worries, posted some of the day’s best moves. Norfolk Southern rose 1 7/8 to 57 7/8, Alaska Air gained 1 to 18 3/4, Roadway jumped 1 1/2 to 59 1/4, and UAL, parent of United Airlines, added 2 to 109 1/4.
* Some industrial stocks that fell out of favor in recent weeks also rebounded. Chrysler gained 5/8 to 21 1/4, Phelps Dodge added 7/8 to 48 3/8, Georgia-Pacific jumped 2 to 54 1/8, and WD-40 soared 2 1/2 to 43 1/2.
* Many biotech issues were hot. Amgen jumped 2 1/4 to 64. Brokerage Dillon Read raised its rating to buy from attractive, saying recent worries about cuts in federal reimbursement for Amgen’s anti-anemia drug were overblown. A bill in Congress would reduce Medicare payments for the drug, but analysts downplayed the chances of the bill’s passage.
Among other biotech issues, Gensia soared 2 5/8 to 40 1/8, Biogen gained 1 to 27 3/4, and Genzyme rose 1 1/2 to 44 1/4.
But Systemix tumbled 9 1/4 to 23 3/4. A Merrill Lynch analyst cut his ratings on the firm, saying its new drugs are facing longer-than-expected delays in developing.
* Toys R Us gained 1 1/8 to 37. PaineWebber rated the stock attractive after the retailer reported strong quarterly earnings.
* Eljer Industries rocketed 3 1/4 to 10. A federal appeals court ruled Friday that the company’s insurer, Liberty Mutual Insurance, must cover about $70 million in product liability claims the company is facing for a plumbing product.
* American Health Properties sank 3 7/8 to 26 1/8. The real estate investment trust said it will write down the value of two psychiatric hospitals it owns, though it said the write-off won’t mean a dividend cut.
Overseas, London’s Financial Times 100-share average rose 19.3 points to 2,376.1, continuing Friday’s rally.
In Frankfurt, the DAX average ended up 7.62 points at 1,555.42.
Tokyo’s market continued to waffle. The Nikkei index rose 109.30 points to 14,929.55, but it failed to hold the 15,000 level it reached in the morning.
Hong Kong suffered a big setback. The Hang Seng index sank 154.74 points, or 2.7%, to 5,667.85 on renewed U.S.-Iraq tensions and a probe of share-shuffling at a major conglomerate.
Credit
Long-term Treasury bond yields closed slightly higher, but yields on shorter-term issues eased.
The tone of the market was set by worries over the economy. Some bond investors fear that President Bush may announce a new economic-stimulus program this week that could spur more federal borrowing and cause inflation to resurge in 1993.
On a technical note, successful bidders in last week’s $36-billion auction of new Treasury securities had to pay for their purchases Monday, forcing some to sell existing long-term bonds to raise cash.
The federal funds rate, the interest on overnight loans between banks, rose to 3.50% from 3.125% late Friday.
Currency
The dollar fell slightly against most currencies in slow trading as the currency market also watched for signals from the Republican national convention.
In New York, the dollar closed at 125.70 Japanese yen, down from 126.00 Friday. It also closed at 1.464 German marks, down from Friday’s 1.465.
A new economic stimulus plan could help the dollar if traders perceive that it will mean higher U.S. interest rates.
In the near-term, meanwhile, traders believe that a new conflict between the U.S. and Iraq also could boost the dollar, by causing a flight to quality among foreign investors. That usually means T-bonds.
Commodities
Copper futures settled sharply higher on the New York Commodity Exchange on technical factors and concern about the deteriorating labor situation at a Polish copper producer.
Copper for September jumped 4.10 cents to $1.15 a pound, a three-week high.
On New York’s Comex, August gold settled $2.10 higher at $336.90 an ounce, stabilizing after last week’s plunge. September silver was 0.50 cent lower at $3.79.
Oil prices moved higher, helped by Mideast tensions. Light sweet crude for September gained 17 cents to $21.45 a barrel on the New York Merc.
Market Roundup, D8
