Dow Dips 2.16 in Mixed Trading : Market Overview
The stock market turned in a mixed and indecisive showing, still marking time after last week’s rise to record highs.
* Government bond yields rose sharply as a Treasury auction of $10.75 billion in 10-year notes got a cool reception from investors.
* The dollar continued to advance against most major currencies in anticipation of favorable U.S. economic data and a weakening German economy. Gold soared by $4 an ounce.
Stocks
Analysts said the market was still faced with selling after its recent upsurge. But they added that enthusiasm over the economic outlook remained high, especially after positive reports Tuesday on retail sales.
The Dow Jones average of 30 industrials, down 22.96 points on Tuesday, slipped another 2.16 points to 3,412.42.
But in the broader market, advancing issues slightly outnumbered declines in the overall tally on the New York Stock Exchange. Big Board volume came to 251.91 million shares, up from Tuesday’s 239.96 million.
In Wednesday’s developments, the newsletter Blue Chip Economic Indicators reported that a consensus of 51 private economists now calls for 3.1% growth this year, up from a previous forecast of 2.9%.
The new figure for inflation-adjusted gross domestic product would represent the best showing since 1988.
Among the market highlights:
* Eastman Kodak by itself accounted for the Dow’s loss, falling 1 3/4 to 52. Some analysts suggested that the stock’s dramatic early 1993 rise might have outrun improving prospects at the company.
Semiconductor stocks were strong after word from a trade group that new orders in the U.S. semiconductor industry topped $2 billion for the first time last month.
* Motorola gained 2 1/8 to 55 7/8; Texas Instruments 2 to 53 3/8, and Intel 4 to 114 1/2 as one of the volume leaders in the NASDAQ market.
* Atlas Corp. plunged 2 1/4 to 2 5/8. The company said it faces serious problems, citing operating losses stemming from low gold prices and declining quality of the ore it has been mining.
* Columbia Gas System climbed 1 3/4 to 22 7/8. Columbia said a judge ruled in its favor on a motion brought by creditors involving debts owed by a subsidiary to the parent company.
Later, however, it also said it didn’t expect to conclude proceedings under Chapter 11 of the federal bankruptcy laws this year.
Auto stocks advanced, benefiting from expectations of a big improvement in the industry’s fortunes this year.
* Ford Motor gained 7/8 to 49 3/4, even as the company reported a widened fourth-quarter loss; Chrysler rose 1 to 40 1/4, and General Motors 7/8 to 39 1/4. GM is due to issue its year-end report today.
In overseas trading, Frankfurt’s 30-share DAX average ended up 8.23 points at 1,649.81. Tokyo’s 225-share Nikkei average closed up 67.63 points to 17,089.90. On the London stock exchange, the Financial Times 100-share average finished down 14.9 points to 2,816.4.
Credit
Bond prices were firmer throughout most of the day in anticipation of a good auction, but fell at midafternoon after the auction results were announced.
The Treasury’s key 30-year bond yield rose to 7.24% from Tuesday’s close of 7.20%, pushing the long bond’s price down 5/8 point, or $6.25 per $1,000 in face amount. Bond prices and yields move in opposite directions.
The Treasury sold $10.76 billion of 10-year notes with an average yield of 6.33%.
While the average yield was about even with expectations, the disparity among dealers’ bids was wider than normal, indicating that dealers were not confident they could sell what they took down, traders said.
The federal funds rate, the interest on overnight loans between banks, was 2.813%, down from 2.875% late Tuesday.
Currency
Analysts said the dollar drew strength from comments by German officials who downgraded their outlook for their economy this year. Economics Minister Guenter Rexrodt predicted that Germany’s gross domestic product would decline by 0.5% this year, while a separate government report predicted a stagnant economy.
A weak German economy makes the Bundesbank more inclined to keep interest rates low, which makes yields on U.S. securities more attractive by comparison.
In New York, the dollar rose 1.660 German marks, up from Tuesday’s 1.654 marks.
Elsewhere, the dollar slipped again against the Japanese yen. The yen has gained strength amid widening pressure on Japan to reduce its trade surplus. A strong yen makes U.S. goods cheaper for Japanese buyers. The dollar closed at 121.15 Japanese yen, down from 121.28 yen the day before.
Commodities
Gold prices posted their strongest gain in five months as a broad rise in raw commodity values reawakened inflation fears.
The Commodity Research Bureau’s index of 21 agricultural and industrial commodities surged 2.56 points to 202.23. Among the markets gaining ground were lumber, cotton, sugar, crude oil, livestock and grains.
Gold leaped $4 on New York’s Commodity Exchange to $333.40 an ounce, its highest settlement since Dec. 30. The rally was the sharpest single-day advance since Sept. 14, when gold rose $5.90.
Elsewhere, crude oil rose 13 cents to $20.18 a barrel on the New York Mercantile Exchange.
Market Roundup, D6
