FINANCIAL MARKETS : Dow Rises 8.67 in Light Holiday Trading : Market Overview
Stocks ended higher in subdued holiday trading Monday, with many investors sitting out the session.
* The dollar rose against most currencies.
Stocks
There was little news to give investors direction, analysts said. The only key economic data out this week--reports on producer and consumer prices--aren’t due until Thursday and Friday.
Still, the Nasdaq and American stock averages set new highs.
The Dow Jones industrial average rose 8.67 points to 3,593.41. In the broader market, advancing issues narrowly outnumbered declines on the New York Stock Exchange.
Volume on the floor of the Big Board came to 183.19 million shares, down from Friday’s 243.60 million. It was the lightest volume since Dec. 31.
The Columbus Day holiday held down the trading volume, analysts said. Banks and the bond market were closed.
Ricky Harrington, senior vice president at Interstate/Johnson Lane, said Friday’s late strength buoyed stocks Monday. On Friday, the Dow closed up about a point, recovering from an earlier 25-point deficit.
Market players were also concerned about the economy and third-quarter corporate earnings reports, which began in earnest this week. Worry about corporate profits has helped keep stocks in a tight trading range recently.
Stocks ended mixed abroad. Frankfurt’s 30-share DAX average ended the session at a record closing high for the fifth day running. The DAX ended 6.01 points higher at 2,011.02. In London, the Financial Times 100-share average ended down 6.4 points at 3,102.2. The Tokyo stock market was closed for a national holiday. Trading will resume today.
Mexican stocks closed sharply higher, breaking through the 1,900-point barrier on optimism over pending nine-month company results, traders said. The IPC average of 37 leading shares closed 40.14 points higher at 1,905.62.
Among the market highlights:
* Drug stocks were strong following Eli Lilly’s announcement it will trim its work force. Analysts said they expect more staff reductions in the industry. While Lilly rose 3 1/2 to 53 5/8, Merck added 3/4 to 31 in heavy trading.
* The principal activity of the day came in the stock of computer chip maker Intel, which fell 4 3/4 to 65 1/2. The company announced record earnings, but they were about 1 cent below the consensus forecast. The company also said its gross margin for the quarter was 62.8%, down from the second quarter’s 64.1%.
* “The stock selloff was overdone considering how good the earnings were,” said James Solloway, director of research at Argus Research Corp. The news spilled over somewhat into other semiconductor stocks, with Micron Technology losing 1 1/2 to 47 1/4 and Motorola dropping 2 to 98 1/2.
* Other technology shares posted solid gains despite Intel’s setback. Apple Computer rose 1 1/8 to 23 3/4 and Synoptics Communications gained 2 1/8 to 23 5/8.
* Kmart slipped 1/2 to 23 3/4 following comments by Chairman Joseph Antonini that President Clinton’s health care plan could increase the retailer’s annual costs by $300 million.
* Tobacco stocks also traded heavily, ahead of third-quarter earnings reports. Philip Morris headed the NYSE most-active list, rising 7/8 to 49 1/8.
The Nasdaq composite rose 3.38 points to a record 767.65, surpassing its previous all-time high of 764.87 set Oct. 4.
On the American Stock Exchange, the market value index rose 2.89 to a record 467.59, surpassing its previous high of 464.70, set Friday.
Currency
Currency traders said the market was focused on a decision due today from Germany’s top court regarding the constitutionality of the Maastrict treaty, the European Community’s attempt to unify the economic, monetary and foreign policies of its members.
“Some people think the court is going to rule against Maastrict,” said Andrew Busch, vice president of foreign exchange at Harris Trust & Savings Bank. “That’s why there has been a buying of marks over the past week.”
A negative decision by the court could doom the treaty. Traders said investors would then flee to the German mark, considered the strongest European currency.
Another factor in the dollar’s rise Monday was a sense that the market had overreacted to U.S. monthly unemployment data released Friday that didn’t meet some traders’ expectations.
“There was a perception the dollar fell too fast on the figures from Friday, which, after all, weren’t disastrous,” said David Sloan, an economist at IDEA, an analytic service.
Traders said Monday’s activity was light due to the Columbus Day holiday in the United States, the Thanksgiving holiday in Canada and Sports Day, a national holiday in Japan.
In New York, the dollar was quoted at 106.19 Japanese yen and 1.604 German marks, up from Friday’s 105.90 yen and 1.603 marks.
The British pound fell to $1.534, from $1.538 on Friday.
Commodities
Oil prices rose, continuing an upward trend of the last two weeks and drawing support from expectations of stronger demand and tighter OPEC supplies.
There was little news to move the market, and traders largely rested on oil futures’ recent momentum. Underlying the technical trend, said Peter Beutel, an energy specialist with Brody, White & Co., a commodity brokerage, were indications of bigger demand and less supply.
“There’s a growing realization that the market is stronger than people had realized,” Beutel said.
Light, sweet crude oil for delivery next month settled at $18.77 a barrel, up 22 cents at the New York Mercantile Exchange.
Meanwhile, gold prices rose. On the New York Commodity Exchange, gold for current delivery closed at $360.20 an ounce, up 30 cents from Friday, while silver for current delivery closed at $4.310 an ounce, off 2.9 cents.
Market Roundup, D8
