Dow Up 9.68 as Investors Await CPI News : Market Overview
Stocks were mostly higher, led by technology and industrial issues, in advance of today’s report on May consumer inflation.
* Treasury bond yields finished slightly higher in quiet trading, after plunging Friday after the May wholesale inflation report.
* The dollar once again hit a new low against the yen, trading early today in Tokyo below 105 yen. Gold and silver stabilized.
Stocks
Investors still appeared tentative about making major commitments to stocks, despite Friday’s encouraging report that wholesale prices were flat overall in May.
That news helped the Dow industrials add 13.29 points Friday. On Monday, the Dow gained another 9.68 points to 3,514.69, but losers barely topped winners on the New York Stock Exchange. Volume was slow.
Wall Streeters remain worried about inflation, which seemed to resurge in March and April. Though the May wholesale inflation report was encouraging, investors are looking for a confirmation of that report in today’s consumer price index report on May inflation.
The market has been concerned about inflation because a sustained rise in prices could prompt the Federal Reserve to tighten credit. Higher interest rates can be deadly for stocks.
However, analysts also noted that any increase in inflation would also probably signal a stronger economy--which could be positive for many industrial and technology companies that are poised to enjoy higher profits from even a slight increase in sales.
Among the market highlights:
* Technology issues that rose sharply included Adobe Systems, up 3 to 72 1/2; Compaq, up 1 7/8 to 55 7/8; Hewlett-Packard, up 1 1/4 to 87 1/2; Microsoft, up 2 7/8 to 92 1/4; Lotus Development, up 1 7/8 to 35 3/8, and Sybase, up 1 1/8 to 70 1/4.
Also, computer networker Newbridge Networks jumped 3 1/2 to 85 3/4. The stock, one of the hottest issues of 1993, will split 2-for-1 on June 30, the company announced.
* Elsewhere in tech, San Diego-based digital communications firm Qualcomm surged 4 1/2 to 55 1/4, a new high. Time Warner said it will install and test Qualcomm’s cellular digital technology over its cable network in Orlando, Fla.
* Industrial issues advancing included Caterpillar, up 1 7/8 to 77 3/4; Deere, up 1 to 66 3/4; USX-U.S. Steel, up 1 to 41 5/8; machinery maker Ingersoll-Rand, up 1 to 34 3/8, and Giddings & Lewis, up 7/8 to 23 5/8.
However, Ford sank 1 7/8 to 51 7/8 after a top executive forecast lower auto sales in Europe and financial losses for Ford there this year.
* Energy stocks stabilized after Friday’s plunge, despite continued skepticism about OPEC’s ability to prevent members from ignoring quotas they set last week. Mobil added 1/2 to 71 3/4, Chevron gained 3/4 to 88 3/8, Arco inched up 1/4 to 117 1/2 and Pennzoil was up 3/8 to 63 1/8.
* Drug stocks advanced again. They have been inching higher recently. Pfizer rose 1 1/2 to 72 3/8, Lilly gained 7/8 to 50 3/4, Merck added 3/8 to 39 and Genzyme leaped 1 to 38.
But surgical device maker U.S. Surgical slumped 3 1/8 to 26 5/8 after forecasting poor second-quarter earnings late Friday.
* Also on the downside, Reebok plummeted 4 3/8 to 30 in after-hours trading. The athletic shoe maker late Monday said second-quarter earnings will be in the range of 44 to 48 cents a share, well below estimates of 56 to 60 cents.
Reebok also said earnings for the full year may be below expectations of $2.90 to $3.00 a share. The company attributed the shortfall to its lack of product in the key basketball shoe category, a new pricing policy and weaker than expected overseas sales.
In foreign markets, Tokyo’s Nikkei average lost 103.60 points to 20,397.35. In Frankfurt, the DAX average added 11 points to 1,691.98. London’s FTSE-100 index jumped 23.7 points to 2,885.5.
Credit
Bond yields were mostly higher in quiet trading ahead of today’s May consumer inflation report.
The yield on the Treasury’s main 30-year bond rose to 6.82% from 6.81% on Friday. Shorter-term yields also were slightly higher.
Bond yields had plunged Friday after the government said wholesale inflation was virtually nonexistent in May. Some traders said that report automatically makes today’s consumer inflation report less important, even if it is higher than expected.
On Monday, the federal funds rate, the interest on overnight loans between banks, was quoted at 3.06%, up from 2.94% on Friday.
Other Markets
The string of record lows continued for the dollar against the Japanese yen.
The dollar closed in New York at 105.10 yen, down from Friday’s 106.15 and its third postwar low in as many sessions.
Early today in Tokyo, the dollar broke through 105 and was trading at 104.88 yen.
The downward momentum of the dollar continued despite repeated attempts by the Bank of Japan to buy dollars and sell yen, both on Monday and early today.
The yen has gained in value at the dollar’s expense this year amid the widespread view that the United States favors a strong yen as a way to whittle its huge trade surplus with Japan.
The German mark, meanwhile, weakened against the dollar Monday. The greenback closed at 1.629 marks in New York, up from 1.626 on Friday.
In commodities trading, gold futures continued their retreat until a late rally erased most of the loss. On the Comex in New York, gold for current delivery dropped 80 cents an ounce to $365.30.
“We’re looking to see where this correction will end,” said Dinsa Mehta, trader at Chase Manhattan.
Gold has been sliding since late last month, when it reached a 28-month high of $384.50.
Meanwhile, silver for current delivery rose on the Comex to $4.21 an ounce from Friday’s $4.19.
Most energy futures were lower at the New York Merc as traders focused on Kuwait’s plan to defy OPEC production quotas. Light, sweet crude for July lost 9 cents to $18.89 a barrel.
Market Roundup, D8
