Kodak, Telmex Plunge; Market Mixed : Market Overview
Sharp declines in several big-name stocks failed to shake the broad market, which closed mixed as bargain hunters continued to hunt around. Smaller stocks were particularly strong.
* Bonds yields were mostly flat, while the gold rally resumed. In Germany, the Bundesbank eased credit slightly again.
Stocks
Eastman Kodak stock was the talk of the day after the company’s recently named chief financial officer abruptly resigned.
Kodak, which has been struggling under the weight of high overhead and poor earnings, had hired Christopher Steffen as CFO just 11 weeks ago.
Steffen had earned a reputation at Honeywell as a merciless cost cutter, and Wall Street assumed that he would do the same for Kodak.
With news of his departure, Kodak stock plummeted 5 1/8 to 47 1/4 in extremely heavy trading. In a statement released by Kodak, Steffen said only that “the company and I disagreed on the approach to solving its problems.”
“Without Steffen, there’s no one at Kodak tough enough to take the necessary steps to restructure the company,” complained Matt Diserio, analyst at PaineWebber Inc.
But Kay Whitmore, Kodak’s embattled CEO, said Steffen departed “not because we disagreed on what needs to change, but because we could not agree on the process for making that change happen.”
Kodak’s loss was IBM’s gain: The bloated computer giant’s shares zoomed 1 1/2 to 49 7/8 on speculation that it might hire Steffen.
While Kodak, a Dow industrials stock, hurt the index, it closed off just 2.43 points to 3,413.50. A rally in oil stocks helped buoy the Dow.
In the broad market, winners topped losers by about 10 to 9 on the New York Stock Exchange on moderate volume. Analysts said buyers were coming back to the market after its recent slide.
The NASDAQ market of smaller stocks was stronger than the NYSE: The NASDAQ composite index gained 0.9% on the day.
Among the market highlights:
* Besides Kodak, the market suffered disappointment over another consumer stock: personal products maker Tambrands. Its shares sank 5 7/8 to 45 1/4 after its quarterly earnings report showed a bigger than expected decline in sales.
* Telmex, the Mexican phone monopoly that was a market favorite in recent years, tumbled 3 3/4 to 47 1/2 on the NYSE after reporting lower quarterly earnings and slower growth in new-line installations.
Heavy selling of the stock on the Mexico City exchange pulled the Bolsa index down 55.61 points to 1,638.88 at the close.
* On the plus side, energy stocks rocketed on a strong earnings report from Chevron. Chevron leaped 3 1/8 to 85, Arco rose 1 3/8 to 124 1/2, Unocal added 1 1/4 to 31 1/8, and Halliburton zoomed 2 1/8 to 40 7/8.
* Auto stocks also powered higher on Ford’s healthy earnings report. Ford jumped 1 7/8 to 54 1/2, Chrysler advanced 1 5/8 to 41, and GM leaped 2 to 42 3/8.
* Among Southland issues, the CTL Credit spinoff of California Federal Bank went public at 11 a share and closed at 10 7/8 on the NASDAQ. Also, real estate auctioneer Kennedy-Wilson soared 1 3/8 to 5 1/2 after an analyst at brokerage Robertson, Stephens touted it.
Overseas, London shares tumbled in futures-related trading. The FTSE-100 index sank 35.4 points to 2,797.3. In Frankfurt, the DAX index lost 11.91 points to 1,628.87.
Tokyo, meanwhile, posted another strong gain, as the Nikkei average added 247.86 points to 20,454.57.
Credit
Unexpectedly strong demand at the Treasury’s sale of new five-year notes helped keep bond yields flat, despite a continuing dour mood among traders.
The yield on the Treasury’s 30-year bond, meanwhile, inched up to 6.91% from Tuesday’s 6.90%.
Interest rates surged Monday and Tuesday on growing concern about the weak dollar and about the Clinton Administration’s budget deficit reduction plan.
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 plan.
The bond market’s rally this year has come largely because of prospects for lower future deficits, which would reduce the number of bonds issued by the government to cover the debt.
Wednesday, traders’ sudden pessimism was toned down after the Treasury managed to sell new five-year notes at a top yield of 5.18%, down from 5.19% at the last such auction.
Other Markets
The dollar rose further 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, where finance officials are expected to discuss exchange rates.
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.
Elsewhere, the gold rally continued as investors pumped more money into the metal, pushing its price on the New York Commodity Exchange to a new nine-month high.
Gold for April delivery on the Comex rose $2.40 to $353.60 an ounce, the highest settlement for spot deliveries since July 31. May silver surged 9.2 cents to $4.18.
Meanwhile, light, sweet crude oil for June rose 1 cent on the New York Merc to $20.19 a barrel.
Market Roundup, D6
