FINANCIAL MARKETS : Dow Rises 15 in Slow Trading; : Bond Yields Fall Market Overview
* Stocks finished mixed on end-of-quarter institutional trading as volume slowed sharply.
* Bond yields eased after surging last week. New evidence of a slower economy helped spur buying.
Trading was lethargic, with many investors awaiting the quarter’s end and the Labor Department’s employment report for March, due on Friday.
The Dow Jones industrial average closed up 15.12 points to 3,455.10 after rising as much as 38 points early in the day.
Though advancing issues topped losers 11 to 8 on the Big Board, trading volume slowed to 201.57 million shares, down from 226.65 million on Friday.
“There’s no conviction to this market,” said Steven Van Brunt, head trader at Nikko Securities International. “Investors are looking for direction.”
Several waves of computerized buying and selling programs skewed prices. End-of-quarter “window dressing” by portfolio managers also was a factor.
Among the market highlights:
* Airlines led the market on optimism about lessening losses for the beleaguered industry. Buyers ignored reports of a new “get-tough” federal policy that could increase competition. Delta surged 2 7/8 to 54 3/4, American Airlines’ parent AMR jumped 1 3/8 to 64 1/2, and United parent UAL gained 2 5/8 to 124 7/8.
* Many retail issues moved up on a positive industry story in Barron’s magazine. Dayton-Hudson added 1 1/4 to 81 3/8, Circuit City rose 7/8 to 25 5/8, Tandy jumped 1 3/4 to 29 1/4, Limited was up 1 1/8 to 24 1/4, and Woolworth rose 5/8 to 32.
* Utility stocks, which have had a strong quarter, advanced anew. Pacific Telesis rose 3/4 to 49, BellSouth gained 1 to 55 3/4, Consolidated Natural Gas added 5/8 to 48 5/8, and Brooklyn Union was up 5/8 to 41.
* Bargain hunters returned to some drug issues. Pfizer rose 1 5/8 to 60, Schering-Plough gained 1 1/2 to 58 1/2, Lilly jumped 1 1/2 to 46 7/8, and Genzyme climbed 1 5/8 to 32 5/8.
* On the downside, lumber and paper stocks slumped after at least two analysts issued negative comments on the group. Weyerhaeuser fell 2 1/2 to 41 1/4, Georgia-Pacific dropped 1 3/4 to 60 7/8, and International Paper eased 1 to 63 1/8.
* Among Southland issues, Imperial Credit Industries sank 3 3/4 to 14 1/4 after the mortgage lender forecast first-quarter earnings below fourth-quarter results. Also, Firstfed Financial lost 2 3/8 to 20 5/8, declining further on its warning Friday of substantially higher first-quarter loan losses.
In general, however, financial stocks gained on the day. First Interstate rose 1 1/8 to 56 3/4, BankAmerica was up 1 1/8 to 50 7/8, and Nationsbank added 5/8 to 54 3/4.
Overseas, Tokyo’s hot rally continued. The Nikkei index gained 259.68 points, or 1.4%, to 19,048.38--the first finish above 19,000 since March 31, 1992.
In Frankfurt, the DAX index added 13.63 points to 1,674.92. In London, the Financial Times 100-index lost 6.4 points to 2,846.5.
In Mexico City, the Bolsa index surged 35.87 points, or 2.1%, to 1,768.33 as buyers continued to bet on lower interest rates.
Bonds yields fell back after last week’s run-up as the government reported new signs of a slowing economy. The yield on the Treasury’s 30-year bond eased to 6.89% from Friday’s 6.94%.
The government said that personal income edged up by 0.2% in February. Many bond traders took that as a sign that the consumer-led recovery of the fourth quarter is definitely slowing in the current quarter.
However, some analysts cautioned that much of Monday’s bond rally was the work of “short covering"--that is, buying by traders who had correctly bet last week that yields would surge. By selling bonds short last week, these traders profited as the prices of the bonds fell.
Monday, those same traders were buying bonds on the open market to cover their positions and pocket their profits. While such buying helps pull bond yields down temporarily, it may not be enough to get the bond rally rolling again, some analysts said.
Anthony Karydakis, senior financial economist at First Chicago Capital Markets, said the bond market was likely to tread water until Friday, when the government reports on March employment.
The dollar turned in a mixed performance as news of political volatility brushed foreign exchange markets. Trading generally was light, with many large players refraining from moves in the waning days of Japan’s fiscal year.
In New York, the dollar settled at 1.626 German marks, down from 1.634 marks on Friday. It also closed at 116.85 Japanese yen, up from Friday’s 116.50. On the Commodity Exchange in New York, gold for current delivery closed at $332.10 an ounce, down 30 cents. Silver gained 2.1 cents to close at $3.75 an ounce.
Market Roundup, D8