MARKETS: Dow Up 7.02 : Dow Up 7.02 on 11th-Hour Buying : Market Overview
Highlights of Monday’s market activity, compiled from Times staff and wire reports:
* After languishing most of the day in the minus column, blue chip stocks ended modestly higher on a last-minute burst of buying. The broader market was mixed.
* The dollar rocketed in thin trading, as investors sought a “safe haven” currency amid escalating tensions between the United States and Iraq. However, the flight to quality didn’t help bonds: Yields on most Treasury issues inched up.
Stocks
Alan Ackerman, market strategist at Reich & Co. in New York, described Monday’s market as “a taffy pull” between a few bulls and bears as 1992 winds down.
The Dow Jones industrial average gained 7.02 points to 3,333.26 in late buying, but most broader indexes finished lower.
On the New York Stock Exchange, declining issues topped advancers by 988 to 813, as volume totaled just 143.8 million shares. Many investors remained sidelined Monday for the holidays.
Small stocks managed to extend their gains, but just barely. The NASDAQ composite index added 0.37 point to 666.25.
The downing of an Iraqi fighter jet by U.S. aircraft Sunday was largely shrugged off by stock players, analysts said.
Many institutional investors have already closed their books on 1992, removing a major source of trading volume from the market. With little economic news to affect investor sentiment this week, analysts warn against reading too much into big moves by individual stocks: Price swings may just be exaggerated by thin volume.
“For the next two or three days the market will be flopping around,” said Dudley Eppel, trader at Donaldson, Lufkin & Jenrette Securities Corp. “The first week in January will be more important.”
Among the market highlights:
* The Dow was held back by losses in AT&T;, off 7/8 to 51 7/8; IBM, off 1 to 51 3/4, and Texaco, which fell 1 1/2 to 58 1/8.
Among Dow components showing strength were Allied Signal, up 1 1/8 to 61 5/8; Goodyear, up 1 3/4 to 69 3/8, and Disney, up 1 1/4 to 44 1/4.
* Technology stocks in general continued to rally, despite IBM’s ongoing slide. Compaq rose 1 1/2 to 49 1/8, Hewlett-Packard jumped 2 1/8 to 68 1/2, Cabletron Systems leaped 1 3/8 to 82 1/2, Cisco Systems rocketed 4 3/4 to 80, and Tekelec zoomed 1 3/4 to 9 3/4. Computer networkers such as Cabletron and Cisco have been in particular demand in recent weeks.
* Some retailers rebounded as reports of Christmas sales results appeared to top even earlier optimistic projections. May Department Stores jumped 2 1/8 to 70 after brokerage Sanford C. Bernstein upgraded its rating on the stock to a buy from a hold.
Other retailers rising included J. C. Penney, up 1 5/8 to 78; Dayton-Hudson, up 1 to 74 1/2; Sears, up 5/8 to 45, and Circuit City, which leaped 1 5/8 to 51.
But Tandy Corp. fell 1 1/4 to 29 1/4 after brokerage Goldman Sachs cut its earnings estimate on Tandy for the year ended next June, citing disappointing Christmas sales at Radio Shack stores.
* Restaurant stocks, which have been among this year’s highest fliers, suffered setbacks as some investors apparently took profits. Southland-based Cheesecake Factory dove 3 7/8 to 21 3/4, Cooker Restaurants fell 2 to 21 1/2, and Sbarro gave up 1 1/8 to 34.
* Among other casualties, Nature’s Bounty sank 4 3/4 to 18 3/4 after the vitamin maker’s prospects were questioned in a story in Barron’s magazine.
* Southern New England Telecom jumped 2 5/8 to 36. An analyst at brokerage Josephthal, Lyon said the stock is a good alternative to some of the Baby Bell issues, many of which have already risen sharply this year.
Overseas, London’s Financial Times index of 100 leading shares ended 0.10 point higher at 2,827.5 after last week’s big gains.
In Frankfurt, the DAX index ended at its highest level in four weeks. It closed at 1,544.61, up 17.66 points.
Tokyo stocks succumbed to Monday blues and closed just off the day’s lows in very thin trading. The Nikkei average fell 368.42 points, or 2.1%, to 17,188.62.
Currency
Some investors and traders scooped up dollars after the U.S. downing of an Iraqi fighter. The dollar is considered the safest currency in times of international or regional political strain, analysts noted.
But trading was thin, and aside from the jet incident, there was little else to rattle the currency markets. “Literally, I’m just sitting here waiting to go home,” one New York trader said.
In New York, the dollar closed at 1.620 German marks, up from 1.599 late Thursday, the last day financial markets were open before the Christmas holiday.
In Tokyo, the dollar ended at 123.93 yen, barely up from 123.65 on Friday. But in Frankfurt, the U.S. currency rose to 124.65 yen. Later in New York, it crept up further to close at 124.90.
Holidays in Britain, Canada, Australia and elsewhere, as well as year-end vacations by U.S. traders and customers, left the market extremely thin and susceptible to price gyrations.
“People are taking the path of least resistance and buying dollars,” said Soma Rao at Mellon Bank. He noted corporate customers were buying dollars in small lots but at a constant pace.
Credit
The yield on the Treasury’s main 30-year bond rose to 7.40%, up from 7.36% late Thursday. Its price, which falls when yields rise, declined 15/32 point, or $4.69 per $1,000 in face amount.
Prices continued to drift lower from last week, when auctions of new securities by the Treasury put downward pressure on prices. Bond prices often fall after a Treasury auction until the market can absorb the new supply.
“All the pieces are not quite in place to call the daily up-trend in Treasury bonds over,” said Scott Knous, an analyst at Technical Data in Boston. “The light trading volume has made it very difficult to get a pulse.”
Analysts said trading volume was expected to remain light the rest of the holiday week.
Yields on three-month Treasury bills rose to 3.23% as the discount rose 1 basis point to 3.17%. Yields on six-month bills rose to 3.43% as the discount rose 4 basis points to 3.34%. Yields on one-year bills rose to 3.62% as the discount rose 3 basis points to 3.49%.
The federal funds rate, the interest on overnight loans between banks, was 3.375%, down from 6.000% late Thursday.
Commodities
Warmer than expected temperatures in the Northeast over the weekend hurt heating-oil demand and pressured energy futures on the New York Mercantile Exchange.
January heating oil futures led the decline to settle 1.01 cents lower at 57.84 cents per gallon. NYMEX unleaded gasoline futures lost 0.70 cent in the January contract to end at 54.41 cents, with February crude oil dropping 13 cents to finish at $19.82 per barrel.
The warm weekend also eased fears of winter kill to the winter wheat crop and freeze damage to the Florida orange crop, sparking disappointed speculative long liquidation in Chicago and New York.
Soft red winter wheat futures traded on the Chicago Board of Trade closed 5 1/4 to 1 cent per bushel lower, with March settling at $3.35 1/4.
Frozen concentrated orange juice futures on the New York Cotton Exchange ended sharply lower on the mild weather, with March ending down 4.30 cents to 92.60 cents a pound.
Gold prices were unchanged from Thursday on the Commodity Exchange, where bullion for current delivery settled at $332.90 an ounce. A late quote from Republic National Bank said spot gold rose 20 cents to $333.35.
