FINANCIAL MARKETS : Stocks Close Mixed; Yields Finish Flat at 2nd Quarter’s End : Market Overview
Stocks ended mixed on the last day of the second quarter, with the Dow industrial average easing as small-stock indexes gained.
* Bond yields jumped and then retreated in volatile trading amid nervousness ahead of Friday’s June unemployment report.
* The dollar surged after President Clinton called for lower German interest rates.
Stocks
Share prices were buffeted by institutional investors adjusting their portfolios at the end of the quarter.
The Dow industrials closed off 2.77 points at 3,516.08, but advancing issues topped losers 11 to 8 on the New York Stock Exchange. Trading volume was active at 287.7 million shares.
The NASDAQ market of smaller stocks saw some quarter-end buying, as the composite index added 2.88 points to close at 703.95.
Stock and bond investors alike are eager to see the report on unemployment, due out Friday, which will give the first glimpse of the economy’s strength in June. After a spate of weak May statistics, stock investors are hoping to see renewed vigor in the economy.
Among Wednesday’s highlights:
* Some industrial issues gained. Often at quarter’s end, institutional investors load up on the quarter’s popular stocks to dress up portfolio reports to clients. Alcoa rose 1 to 70; Cummins Engine gained 7/8 to 85; Deere leaped 1 3/4 to 66 3/8; Ford rose 3/4 to 52 1/4 and Fleetwood Enterprises was up 1 to 19 7/8.
* Technology issues were mostly higher. Software giant Oracle surged 3 to 49 1/4 after reporting record quarterly earnings. Other winners included Computer Sciences, up 1 5/8 to 83 5/8; Sybase, up 1 1/4 to 74 1/4 and Rainbow Technologies, up 1 3/8 to 28 5/8.
But electronic components maker Thomas & Betts slumped 3 to 63 3/4 after it projected lower quarterly results.
* In takeover and restructuring news, Quantum Chemical rocketed 6 1/2 to 19 after Hanson PLC said it will buy the company for $3.2 billion in stock and assumed debt. Hanson was unchanged at 17.
Also, Clorox jumped 2 to 52 1/8. The firm said it will sell its frozen food business to Heinz, and will refocus its energies.
* Student Loan Marketing gained 2 1/2 to 43 1/4 after the House of Representatives went on record as favoring only limited changes in the federal student loan program.
*Atari surged 1 1/8 to 4 1/8 on the Amex. IBM will make Atari’s new multimedia entertainment system, the companies announced.
* On the downside, Telmex fell 1 5/8 to 46 3/4 after a U.S. judge ordered the Clinton Administration to delay submitting the proposed North American Free Trade Agreement to Congress until information on its environmental impact accompanies it. That could take months, even years.
In Mexico City, news of the judge’s order sent the Bolsa index tumbling 30.84 points, or 1.8%, to 1,670.29.
In Tokyo, the Nikkei average rose 46.58 points, to 19,590.
In Frankfurt, the DAX average fell 10.70 points to 1,697.63. In London, the FTSE-100 rose 14 points to 2,900.0.
Credit
Bond yields, which had been hitting their lowest levels in 20 years or more, rose in early trading but retreated by afternoon.
Traders traced some early bond selling to a jump in the Commodity Research Bureau index, considered a harbinger of inflation. The index spurted 1.98 points to 207.12.
Also, a rise in the Chicago purchasing managers’ index, which measures business activity in the Midwest, may have hurt bonds. Bond investors fear that renewed economic strength will send interest rates up again.
By the close, however, the yield on the Treasury’s 30-year bond was unchanged at 6.67%.
Traders will carefully dissect Friday’s June employment report for any sign of growth picking up speed. Many analysts note, however, that most economic reports in recent weeks have suggested a slowing economy, not an accelerating one.
Other Markets
The dollar rallied after President Clinton called for lower German interest rates as a way of stimulating the world economy.
Lower German rates would make mark-denominated investments less attractive and lure funds to dollar-based assets.
The President, speaking to reporters and relating his goals for the Group of Seven summit in Tokyo next week, said the German Bundesbank should lower interest rates “so that all of us together can expand this economy.”
In New York, the dollar promptly jumped to 1.706 marks from 1.689 on Tuesday. It also rose to 106.95 Japanese yen from 106.50.
On New York’s Comex, gold for current delivery settled at $378.40 an ounce, down 20 cents. Silver eased 0.5 cent to $4.56 an ounce.
Elsewhere, light, sweet crude oil for August delivery was off 16 cents at $18.85 a barrel.
Market Roundup, D6
