Busy ‘Triple Witching’ Day Leaves Market Mixed
Market Overview * Stocks finished mixed Friday in the busiest session of the year as “triple witching” futures-related trades dominated market activity.
* Interest rates also closed mixed, although the yield on the bellwether 30-year Treasury bond rose again, finishing the week well above its record low.
* Oil prices attempted a rally, while gold eased.
Stocks
The Dow industrials tumbled 17.60 points to 3,613.25, but the broad market looked much better.
On the New York Stock Exchange, winners slightly edged losers. And in the Nasdaq market of mostly smaller stocks, the composite index inched up 0.31 point to 740.11.
Trading in blue chips was skewed by discouraging earnings projections from two major firms, and by the once-a-quarter expirations of key futures and options contracts.
The day began with an explosion of trading tied to the so-called triple-witching futures and options expirations, as speculators and hedgers settled complicated trades involving stocks on one side and futures or options on the other.
This phenomenon of coinciding expirations on the third Friday of the last month of each quarter typically produces hectic and erratic trading.
Volume on the Big Board ballooned to 381.9 million shares, up from 229.7 million on Thursday. It was the heaviest trading since 371.0 million shares traded Dec. 18, also a triple-witching day.
The day’s turnover was inflated by an unusually large number of trades in the first 30 minutes of the session, when a record 158.95 million shares changed hands. That exceeded the previous high of 120.3 million shares traded in the opening half-hour on June 17, 1988.
Though the Dow was off 30 points in midafternoon, it climbed back near the close.
The Dow was hurt by trouble in Westinghouse Electric and Eastman Kodak, two of the 30 stocks in the index. Both issued disappointing quarterly earnings projections.
But tempering the day’s selling was a perception that the economy overall finally might be pulling out of its malaise, traders said. Some said the batch of mostly positive economic statistics released during the week was bolstering investor confidence.
For the week, the Dow lost 8.38 points; the Nasdaq index slipped 4.20 points.
Among Friday’s highlights:
* Westinghouse dropped 1 1/8 to 13 3/4 after saying third-quarter operating earnings will be down 50% from a year ago. The company blamed sagging profit in its environmental cleanup division.
Meanwhile, Kodak slumped 1 7/8 to 59 7/8 after saying it will be a “challenge” to match last year’s third-quarter earnings. The troubled film giant said total revenue was down in the mid-single digits during July and August.
* Other industrial issues were mixed. GM lost 1 1/8 to 45 3/4 and Phelps Dodge fell 1 3/4 to 40 7/8, but GE gained 1/2 to 98 3/4 and Georgia-Pacific leaped 1 3/8 to 63 5/8.
* Energy-related stocks weakened for a second day on concerns about third-quarter earnings. Mobil lost 1 to 76 1/8, Chevron fell 3/4 to 91, Halliburton slumped 1 3/8 to 35 3/8 and Schlumberger gave up 1 5/8 to 62.
* On the upside, gambling stocks rallied anew. MGM Grand rose 1 to 45 3/8, Promus gained 2 1/4 to 68 5/8 and International Game Technology added 3/4 to 38 3/4.
* Among Hollywood issues, Paramount Communications zoomed 3 1/2 to 68 1/2 on speculation of a higher takeover offer. Viacom, which has a deal to merge with Paramount, saw its Class A shares lose 1 1/8 to 59 7/8 and its B shares fall 7/8 to 54.
The continuing slide in Viacom stock may increase the likelihood of a better offer for Paramount from other companies, traders noted, because Viacom’s bid is mostly in stock.
Overseas, Tokyo’s Nikkei average lost 111.11 points to 20,391.04 after the government’s fiscal stimulus package failed to generate investor excitement. For the week, the Nikkei lost 427 points.
In Frankfurt, the DAX index rebounded 26.32 points to 1,881.99, and London’s FTSE-100 average inched up 1.6 points 3,005.5.
In Mexico City, the Bolsa index finished at 1,848.34, down 20.54 points on fresh worries about the North American Free Trade Agreement’s prospects.
Other Markets
Bond yields surged early in the session in what analysts said was follow-through to a selloff triggered Thursday afternoon, when the Federal Reserve Board reported higher than expected growth in the nation’s money supply.
But buyers soon returned to the market, led by mutual funds, traders said. “People started bottom-fishing,” said Steven R. Ricchiuto, economist at Barclays de Zoete Wedd Government Securities.
Still, the bellwether 30-year T-bond yield closed up for the day at 6.04%, versus 6.03% on Thursday. One week ago, the yield was 5.87%.
Analysts noted that the generally upbeat economic news this week caused some bond investors to question whether the long slide in interest rates is nearing an end.
On Friday, word of a slight decline in the University of Michigan’s regular survey of consumer confidence may have helped the bond market by suggesting that the economy’s outlook is still iffy.
Elsewhere:
* The dollar rose against most major currencies in light trading as investors waited to see if Japan would take further steps to calm trade tensions that have fueled the yen’s advance this year.
The dollar closed in New York at 104.47 Japanese yen and 1.615 German marks, up from 104.15 yen and 1.603 marks.
* Energy futures prices edged higher. Light, sweet crude oil for October gained 24 cents to $17.07 a barrel on the New York Merc.
* Gold failed to sustain its three-day rebound, closing at $350.80 an ounce on the Comex, off $1.80. Silver eased 2.4 cents to $4.04.
Market Roundup, D4
