Traders Unfazed by Iraq Raid; Blue Chips Ease : Market Overview
Financial markets showed little reaction to the U.S.-led bombing raid of Iraqi missile sites, as most investors appeared to focus on longer-term concerns and corporate quarterly earnings reports.
Blue chip stocks eased, but the NASDAQ market reached a new high on yet another surge in Intel.
* Unexpectedly low car sales figures for the first 10 days of January suggested a still-weak economy, pushing bond yields slightly lower.
Stocks
Wall Street traders, already expecting a U.S. strike on Iraq, had no reason to react overtly to the news, analysts said.
While buying interest was muted around midday as word of the strike hit the market, it did not disturb most of the stock trends already in place. However, some defense and oil stocks did gain.
The Dow Jones industrials ended down 1.08 points to 3,263.56, even though advancing issues outnumbered declines by more than 4 to 3 on the New York Stock Exchange.
Big Board volume was a heavy 245.36 million shares, compared to 239.41 million Tuesday.
The NASDAQ market once again took the spotlight: That market’s composite index leaped 7.33 points, or 1%, to a record 686.78, boosted by semiconductor giant Intel Corp., whose shares soared 8 1/8 to 110 1/8.
The buying frenzy in Intel followed its report of sharply higher fourth-quarter earnings and helped spark a new round of buying in technology stocks in general.
At the same time, however, investors continued to react badly to disappointing quarterly reports from a number of major industrial companies.
Among the market highlights:
* Other tech stocks following Intel higher included Apple, up 2 to 63 1/2; Microsoft, up 1 1/2 to 91 1/4; Cabletron Systems, up 3 1/8 to 84 3/4; Autodesk, up 1 3/4 to 51 3/4, and Cisco Systems, up 2 1/4 to 86 1/8.
Meanwhile, software firm Adobe Systems rocketed 7 1/4 to 40 1/4 after it reported better than expected quarterly results.
* Another tech-stock bellwether, Motorola, rose 1 to 112 3/8. After the market closed, it reported quarterly earnings up 44%.
* Defense stocks were mostly higher in the wake of the strike on Iraq. Loral added 1 7/8 to 50, General Dynamics jumped 3 1/8 to 109 1/8, Lockheed was up 1 to 56 1/4, and E-Systems gained 5/8 to 44.
* On the downside, some key industrial stocks that reported lower quarterly earnings Tuesday continued to slide. Alcoa, for example, dropped 1 1/8 to 68 5/8, and International Paper lost 1 3/8 to 61 3/4.
Another industrial issue, machinery maker Harnischfeger, fell 2 5/8 to 17 3/8 after it said earnings in the first half of fiscal 1993 could be “less than half of comparable earnings last year.”
* Among consumer stocks, Philip Morris slid 1 1/4 to 73 3/4 amid concerns that its Marlboro cigarette brand is increasingly losing market share to discount brands.
* Utility stocks were strong. Investors often move into these stocks when they fear that the market could be headed for a rough period. The strike on Iraq may have helped that sentiment.
Among electric utilities, Houston Industries added 5/8 to 45 7/8, SCEcorp gained 1/2 to 43 1/2, Detroit Edison was up 1/4 to 33, and Southern Co. rose 1/2 to 38 1/4.
* Oil stocks also appeared to be helped by the new Mideast turmoil. Arco rose 1 3/8 to 110 3/8, Mobil was up 1 to 64 1/4, Phillips gained 5/8 to 25 1/4, and Amoco added 1 1/8 to 50 3/8.
Overseas, Frankfurt’s DAX average dropped 13.69 points to 1,516.50. In London, the Financial Times 100-share average fell for the seventh consecutive day, sliding 12.6 points to 2,745.3.
In Tokyo, the Nikkei average declined 163.14 points to 3,517.91
Credit
The bond market showed little reaction to the commencement of the raids in Iraq. Traders said the market had anticipated such an attack for several days.
More significant was the weak report on early January car sales: Autos sold at an annual sales rate of 5.3 million units, far below the 6.2-million-unit annual pace indicated by December figures.
Wednesday’s figures signaled to bond traders that the economic recovery may not have taken as strong a hold as thought.
That pushed yields down across the board. The yield on the Treasury’s 30-year bond eased to 7.44% from 7.47% Tuesday.
In the municipal market, California State Treasurer Kathleen Brown announced that she is trimming plans to issue new state bonds. She cited the state’s continuing financial woes.
Brown said she will reduce bond sales by 21% to $5.9 billion over the next two years, from a planned $7.5 billion. To make up for the reduced borrowing, California will tap $1 billion of uncommitted bond proceeds for investment in schools, roads and other projects.
Other Markets
The dollar ended mostly mixed on world currency markets in trading that was mundane despite the air strikes against Iraq.
The greenback closed in New York at 1.624 German marks and 125.65 Japanese yen, compared with Tuesday’s 1.631 marks and 125.20 yen.
Elsewhere, wheat futures soared on the Chicago Board of Trade, strengthened by surprising news from the government that winter plantings are much lower than previously thought.
Wheat for March delivery ended 6.50 cents higher at $3.75 a bushel.
Meanwhile, precious metals failed to react to the Mideast tension. Gold fell $1.00 to $327.50 an ounce on the New York Commodity Exchange. March silver was unchanged at $3.70.
Market Roundup, D6
