FINANCIAL MARKETS : Market Marks Time, Awaiting Inflation News : Market Overview
Stocks fell back from a morning rally, ending only modestly higher as cautious investors awaited Friday’s report on May inflation.
* Bond yields fell moderately as some buyers bet on a favorable inflation report.
* The dollar rose against European currencies after financier George Soros said the German mark was overvalued. But early today in Tokyo, the dollar hit a new low of 105.95 yen.
Stocks
Stocks spent most of the day firmly in positive territory before sliding late in the session.
Still, buyers appeared to outnumber sellers, after two days of widespread profit taking.
The Dow industrials added 1.39 points to 3,511.93, as advancing issues outnumbered declines by about 7 to 6 on the New York Stock Exchange. Big Board volume was moderate at 242.39 million shares.
Many of the groups that were hit hardest by selling in recent days snapped back. But analysts said many investors were hesitant to make a big move before Friday’s report on May wholesale inflation.
Wall Street fears that a higherthan expected inflation report would cause the Federal Reserve to tighten credit.
Among the market highlights:
* Casino stocks, which had led the market lower in recent days after surging in May, rebounded somewhat. Casino Magic rose 3 5/8 to 67 1/2, Promus jumped 2 5/8 to 41 7/8, Caesars World gained 1 1/8 to 46 5/8, Mirage Resorts added 1 7/8 to 43 1/2 and Boomtown jumped 2 to 28 1/4.
* Bank stocks also rose modestly. They have been under pressure because of rising short-term interest rates. BankAmerica added 7/8 to 42 1/8, Wells Fargo jumped 2 1/8 to 98 3/4, Citicorp inched up 1/8 to 26 3/4 and NationsBank rose 1/2 to 46 1/8.
* Energy stocks were strong. Mobil jumped 1 5/8 to 73 5/8, Exxon added 1 1/8 to 67 3/8, Unocal was up 5/8 to 31 7/8, Amoco rose 1 1/2 to 58 1/8 and Enron Oil & Gas gained 1/2 to 44.
* On the downside, Apple Computer plunged 5 1/4 to 44 1/4 after warning of lower earnings in the near term because of personal computer price wars. Paine Webber cut its fiscal 1993 earnings estimate for Apple to $3.75 a share from $4.00.
Rival Compaq also plummeted, losing 4 3/8 to 53 3/4 on pricing fears and on news that insiders have been heavy sellers of the stock.
However, other tech stocks were mostly unaffected by the Apple and Compaq declines.
* Southland biotech firm Immune Response slumped 5 5/8 to 16. Some investors were disappointed with the mixed trial results of the firm’s HIV vaccine, designed to slow the progress of AIDS in infected patients. The results were announced at a Berlin conference.
Overseas, London’s FTSE-100 index jumped 22.5 points to 2,866.9, and Frankfurt’s DAX index added 11.46 points to 1,673.07. Tokyo markets were closed for the royal wedding.
Credit
Short- and long-term interest rates pulled back as some bullish traders bought bonds in anticipation of the inflation report.
The yield on the Treasury’s 30-year bond slipped to 6.88% from 6.91% on Tuesday. The discount rate on three-month T-bills slid to 3.09% from 3.12%.
A lower than expected inflation report could cool worries, allowing interest rates to ease again. However, a strong inflation report would have the opposite effect, sending interest rates soaring, traders said.
The market has been fixated on inflation figures because March and April consumer and wholesale prices posted strong gains.
Other Markets
Billionaire speculator George Soros rattled the currency markets, telling a British newspaper that Germany’s Bundesbank has kept interest rates too high for too long and that he expects rates to fall and the German mark to depreciate.
“For the sake of full disclosure, I am talking my book (portfolio),” Soros told the Times of London.
The dollar promptly jumped to 1.637 marks in New York, up from 1.627 on Tuesday.
Dealers said Soros’ views, while widely held, were aired at a time when the market was looking for a reason to buy dollars.
Meanwhile, trading in the yen was muted as Tokyo markets were closed for the royal wedding. The dollar closed at 106.40 yen in New York, unchanged.
But early today in Tokyo, the dollar hit yet another new low, trading at 105.95 yen.
Elsewhere, gold and silver edged lower as their recent rally continued to lose steam. Gold for current delivery fell $2.50 to $371.50 an ounce on New York’s Comex. Silver lost 5.3 cents to $4.34.
Energy futures were flat as OPEC ministers struggled at their conference to meet at least some Kuwaiti demands for higher production quotas. Light, sweet crude for July settled at $19.64 a barrel, down a penny, at the New York Merc.
Market Roundup, D6
