Dow Dips 10.26 as Investors Await Reports : Market Overview
Highlights of Monday’s market activity, compiled from Times staff and wire reports:
* Stocks declined slightly in quiet trading as investors awaited new signs of the economy’s direction.
* Bond prices rose in light trading. Market participants expect a slow week before the government releases August unemployment data Friday.
Stocks
Many traders were on vacation and others sat on the sidelines waiting for a full plate of economic data due this week, including the crucial employment figures for August.
The Dow Jones industrial average dropped 10.26 points to 3,257.35, finishing a rocky August with a net loss of 136.43 points, or 4.02%.
In the broader market, declining issues nosed out advances on the New York Stock Exchange. Big Board volume came to 161.48 million shares, against 152.26 million the previous session.
The dollar has steadied of late in currency markets, relieving a big worry that had been weighing down stock prices much of the month.
In addition, Japanese stocks have rallied sharply from the six-year lows they hit less than two weeks ago. The 225-share Nikkei average rose 90.33 points to 18,061.12. It was the first time the Nikkei had closed above 18,000 since early June.
Brokers said U.S. investors’ attention has already begun to turn toward Friday’s Labor Department report on employment.
Economists expect the data to show a big increase in non-farm payroll employment, although due in large measure to the temporary effects of a summer jobs program.
Merger agreements sparked brisk activity in some of the few stocks that departed from the day’s generally sluggish pattern.
Among the market highlights:
* Diagnostek jumped 6 1/8 to 16 1/2 and Medco Containment Services, traded on the NASDAQ, fell 1 5/8 to 28 1/4. Medco agreed to acquire Diagnostek through an exchange of stock.
* Sun Electric gained 1 1/8 to 11 in active trading after Snap-On Tools agreed to acquire it for $11.25 a share. Snap-On’s shares dipped 1/8 to 30 7/8.
* Bank of Boston fell 1 3/8 to 20 1/4 while Society for Savings Bancorp jumped 2 5/8 to 15 1/8. Bank of Boston said it will acquire Society in an exchange of stock valued at $195 million.
* St. Jude Medical, one of the NASDAQ volume leaders, rose 3/8 to 31 1/4. A Barron’s magazine article argued that the stock has dropped so sharply in recent weeks that further erosion is unwarranted.
* Losers among the blue chips included Merck, down 1/2 at 48 5/8; International Business Machines, down 5/8 at 86 5/8; Aluminum Co. of America, down 1 5/8 at 64 5/8; Coca-Cola, down 1/2 at 42 7/8, and McDonald’s, down 1/4 at 42 1/2.
* Auto issues, by contrast, rebounded from a recent selloff. General Motors climbed 1 1/8 to 34 5/8, Ford Motor 1 to 40 3/4 and Chrysler 5/8 to 19 3/4.
* Compaq Computer gained 1 3/4 to 32 3/8. The company introduced two printers--the first products under a licensing agreement giving it rights to Adobe Systems’ PostScript software.
In Europe, Frankfurt’s 30-share DAX average shot up 24.78 points, or 1.6%, to 1,541.25.
The London stock market was closed for a public holiday.
Bonds
The price of the Treasury’s main 30-year bond rose 5/32 point, or $1.56 per $1,000 in face amount. Its yield fell to 7.41% from 7.42% Friday.
Steven A. Wood, an economist at BankAmerica Capital Markets in San Francisco, said a new home sales report helped the market.
The government reported that new home sales fell in July for the fourth time this year. They were sold at a seasonally adjusted annual rate of 563,000 last month, down 2.6% from the month before.
Economists had expected a slight increase in sales.
Such weak economic news generally increases hopes for lower interest rates, which lifts bond prices. But optimism in the bond market has been suppressed by the recent decline in the value of the dollar.
The federal funds rate, the interest on overnight loans between banks, was 3.250%, up from 3.313% Friday.
Commodities
Energy futures prices extended their recent strong gains on the New York Mercantile Exchange amid perceptions of spot fuel shortages due to storm-slowed refinery operations in the Gulf of Mexico.
On other commodity markets, lumber futures soared in a continuing reaction to Hurricane Andrew, precious metals rose, grains and soybeans were mixed, and livestock and meat were mixed.
Light sweet crude oil for October delivery rose 17 cents to $21.48 a barrel, September heating oil shot up 1.10 cents to 60.47 cents a gallon, and September unleaded gasoline rose .82 cent to 64.10 cents a gallon.
October natural gas slipped 0.3 cent to $2.112 per 1,000 cubic feet. The retreat followed a surge of nearly 32 cents last week after the hurricane damaged gas production platforms in the Gulf.
October gold rose $2.80 to $343.60 an ounce and September silver 5.6 cents to $3.73 an ounce on New York’s Commodity Exchange. October platinum deliveries rose $2.90 to $360.90 an ounce on the New York Mercantile Exchange.
Currency
The dollar declined in uneventful trading on world currency markets.
Dealers said trading was light. A bank holiday closed financial markets in London, while Hong Kong markets were closed in observance of the anniversary of the end of World War II.
The dollar was hindered by the worse-than-expected report on single-family home sales.
Much of the day’s activity centered on trading between European currencies.
In New York the dollar settled at 123.05 yen, unchanged from Friday. It fell to 1.403 German marks from 1.409.
It took $1.988 to buy a British pound, more expensive than Friday’s $1.983.
Market Roundup, D8
