Kodak Resignation Knocks 2.43 Off Dow : Market Overview
* A steep drop in Eastman Kodak shares pushed the Dow Jones industrials lower, but the broad market firmed. The industrial average eased 2.43 points to 3,413.50.
* Treasury bonds continued their recent slide, pushed down by worries over inflation, the deficit and the growing possibility of U.S. military involvement in Bosnia.
Stocks
Wall Street’s blue chip stocks pared their losses to end slightly lower Wednesday after being ravaged by a slide in shares of Eastman Kodak, whose chief financial officer suddenly resigned.
But stocks of smaller companies extended their gains from Tuesday.
In the broad market, gains led losses by about 10 to 9 on the New York Stock Exchange, where 267.9 million shares changed hands, down from 284.1 million in the previous session.
Kodak landed a bombshell with its announcement that a just-hired and much-lauded executive who won shareholders’ hearts with promises to cut costs and restore profit had quit.
The news, accompanying a report of a barely visible first-quarter profit, led to mob-selling of the photography giant’s shares. Its stock tumbled 5 1/8, or 10%, to close at 47 1/4, topping the New York Stock Exchange’s most active list.
Kodak offered little insight into why CFO Christopher Steffen--on the job just 11 weeks and portrayed as an unflinching cost cutter--had left.
“The company and I disagreed on the approach to solving its problems,” Steffen said in a statement released by Kodak.
Speculation immediately arose that Steffen was jumping ship, perhaps to International Business Machines Corp., which itself recently shuffled top executives and installed a new chairman in a bid to restore profitability. IBM’s vice chairman also stepped down Wednesday. IBM shares rose 1 1/2 to 49 7/8.
In foreign trading, Mexico stock prices posted their second-biggest fall of the year as investors rushed to sell off telephone monopoly Telefonos de Mexico stock. The 38-share IPC index closed 55.61 points lower at 1,638.88. On Wall Street, shares of Telmex slumped 3 3/4 to 47 1/2. It reported first-quarter earnings well below analyst expectations.
Shares fell sharply on London’s stock exchange, with the Financial Times 100-share average losing 35.4 points to finish at 2,797.3. Frankfurt’s DAX 30-share average lost 11.91 points to end at 1,628.87. In Tokyo, the 225-share Nikkei average was up 247.86 points to 20,454.57.
Among the trading highlights on Wall Street:
* Blue chip stocks were mixed. Allied Signal fell 3/8 to 62 1/4, American Express declined 1/2 to 27 3/4, and General Electric lost 2 1/8 to 90 3/8. But Disney rose 1/4 to 41 1/8, DuPont added 5/8 to 53, and Westinghouse was up 3/8 to 15 3/8.
* Automotive stocks rose after Ford reported unexpectedly high first-quarter earnings. Ford rose 1 7/8 to 54 1/2, Chrysler advanced 1 5/8 to 41, and General Motors added 2 to 42 3/8, all in heavy trading.
* Oil stocks rose after Chevron and Mobil posted strong first-quarter earnings Tuesday. Chevron rose 3 1/4 to 85, and Mobil added 1 3/8 to 69 1/8.
Credit
Unexpectedly strong demand at the Treasury’s sale of five-year notes helped lift secondary market bond prices off their lows. But the key long bond posted a modest loss, while short- and intermediate-term securities rose only slightly.
The price of the Treasury’s main 30-year bond ended down 1/8 point, or $1.25 per $1,000 in face value. Its yield, which moves in the opposite direction from price, rose to 6.91% from late Tuesday’s 6.90%.
It was the bond’s highest yield in about three weeks and reflected bearish sentiment that has confined trading to a narrow price range.
Leon Panetta, White House budget director, was quoted in several newspapers Tuesday as saying he has become increasingly discouraged about the outlook for passage of the deficit-reduction plan.
The bond market’s rally has come largely because of prospects for a lower federal budget deficit, which would reduce the number of bonds issued by the government to cover the debt.
The federal funds rate, the interest on overnight loans between banks, rose to 3.0% from 2.0% late Tuesday.
Currency
The dollar eked out another gain against the Japanese yen on momentum from Tuesday’s trading, when the Federal Reserve intervened to halt the U.S. currency’s slide. In New York, the dollar settled at 112.12 yen from late Tuesday’s 111.70.
However, dollar buyers began to lose enthusiasm on the eve of the Group of Seven meeting today. Finance officials are expected to discuss exchange rates at that session.
The dollar slipped against the German mark and was mixed against other European currencies, although Germany and other European nations cut key short-term interest rates.
Germany’s central bank reduced the minimum rate at which it lends money to commercial banks for a two-week period to 7.75% from 8.09% a week earlier.
Commodities
Investors pumped more money into gold, pushing the metal’s price on New York’s Commodity Exchange to a new nine-month high.
Silver futures also rose sharply in New York. On other commodity markets, oil futures rose, livestock and meat futures were mixed, and grains and soybeans were mixed.
Gold for April delivery on the Commodity Exchange rose $2.40 to $353.60 an ounce, the highest settlement for spot deliveries since July 31. May silver surged 9.2 cents to $4.179 an ounce.
Light, sweet crude oil for June delivery rose 1 cent on the New York Mercantile Exchange to $20.19 a barrel.
Market Roundup, D6
