FINANCIAL MARKETS : Stocks Edge Up; T-Bond Yields Slip : Market Overview
* Stock prices edged higher in subdued trading with investors reluctant to make significant commitments ahead of inflation data and corporate earnings reports due this week.
* Long-term Treasury security yields edged lower as investors anticipated favorable news in the wholesale inflation report due today.
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The Dow Jones industrial average rose 3.32 points to 3,524.38, on relatively light Big Board volume of 202.94 million shares, down from 235.21 million shares.
Advancing issues outnumbered declines by about 8 to 7 on the New York Stock Exchange.
Today, the government is scheduled to release the June Producer Price Index, and on Wednesday, it will release the Consumer Price Index for the same month. Investors are waiting to see the data, analysts said.
“The market will continue to drift until we see some more numbers,” said Peter Canelo, chief investment strategist at NatWest Securities Corp.
Eugene Peroni, director of technical research at Janney Montgomery Scott Inc., said investors will be looking to the corporate reports for indications of future growth possibilities.
Investors received little direction from stocks abroad. In Tokyo, the 225-share Nikkei average rose 102.61 points to 19,980.00, while Frankfurt’s DAX-30 average gained 20.76 points to close at 1,818.17. In London, the Financial Times’ 100-share average was down 12.3 points at 2,830.9.
Gold mining shares again peppered most active lists. Ebbing and flowing inflation fears have made gold stocks volatile recently. Gold is considered by many to be a hedge against cost-of-living increases.
* On the NYSE, Sunshine Mining rose 1/4 to 3 3/8, while on the Amex, Echo Bay Mines rose 1/2 to 13 1/8.
* Auto stocks also traded actively after soaring late last week. Ford Motor fell 2 to 50 1/8, General Motors dropped 5/8 to 46 7/8 and Chrysler lost 5/8 to 46 7/8.
Poor earnings forecasts knocked down at least two stocks. Alco Standard, the paper company, fell 4 3/4 to 44, and Duty Free International fell 6 1/4 to 19 7/8.
Profit reports hurt two others.
Aluminum Co. of America fell 1 to 70 1/2. The company said Friday that its second-quarter earnings were lower than the same period last year.
And in NASDAQ trading, Intel fell 3/8 to 55 5/8 after the company reported second-quarter earnings in line with market expectations. Market watchers attributed the slide partly to lack of positive surprises in the report.
QVC Network rose 2 1/2 to 67 3/4 after it was reported the company has proposed a merger with Home Shopping Network. Home Shopping led the NYSE most-active list, rising 1 to 13 5/8.
In Amex trading, Andrea Electronics rose 9 5/8 to 38 1/2. Technology Service Group will distribute two of Andrea’s Active Noise Cancellation kits to several telephone companies for use in public telephones.
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The decline in long-term bond yields pushed prices to a record high, in extremely light trading as many investors refrained from trading ahead of the Labor Department’s June Producer Price Index.
But several large issuers of corporate debt took advantage of the low yields, which move in the opposite direction from prices, to issue long-term bonds. A Time Warner Inc. unit, for example, offered $1 billion in 40-year bonds, an unusually long maturity, in the company’s latest effort to pare debt costs.
The yield on the Treasury’s main 30-year bond slipped to 6.62% from Friday’s close of 6.64%. Its price rose 7/32 point, or $2.19 per $1,000 in face value.
Short-term Treasuries were unchanged and intermediate maturities ranged from unchanged to up 1/16 point, the Telerate Inc. financial information service reported.
It was the third consecutive closing record low for the long bond’s yield. But despite positive sentiment about inflation, many investors are nervous about buying bonds at these high prices with no news emerging to drive the market.
“We have good news coming, but until you get it, traders will be hard-pressed to push it higher,” said David Ader, a market strategist at Technical Data in Boston.
Bond investors fear inflation because it reduces the value of investments with a fixed rate of return.
The federal funds rate, the interest on overnight loans between banks, was 3.063%, up from 2.938% Friday.
Other Markets
The dollar was mixed against the major currencies, gaining against the German mark interventions by Germany’s central banks.
Traders were scarce and thus trading was down
In New York, the dollar was trading late at 109.45 Japanese yen, down from 109.96 yen Friday. The dollar rose to 1.729 German marks from 1.722 marks.
The British pound was trading late at $1.477, down from $1.481 Friday.
Meanwhile, in commodities trading, gold prices rose on New York’s Commodity Exchange. Gold for current delivery closed at $394.30 an ounce, up $2.70 from Friday. Silver closed at $5.060 an ounce, up from $5.003 on Friday.
Energy futures were higher on the New York Mercantile Exchange on perceptions that the impasse between Iraq and the United Nations over the closing of a missile test site could block an oil agreement. August light sweet crude was 21 cents higher at $18.10 a barrel.
