Dow Falls 6 Ahead of 1-Day Closure
The Dow Jones industrial average closed slightly lower Tuesday as investors took profits from the previous day’s surge and prepared for the market being closed today in memory of former President Richard Nixon.
The Dow meandered at modestly lower levels throughout the uneventful session. It closed at 3,699.54, off 6.24. The popular market indicator advanced 57.10 points Monday to end above 3,700 for the first time in about a month.
Most broad market measures heavily weighted with New York Stock Exchange issues also lost ground. The NYSE composite slipped 0.06 to 250.41; Standard & Poor’s 500-stock index shed 0.84 to 451.87. The Nasdaq composite index of mostly small issues rose 3.41 to 734.21.
Advancing stocks outnumbered declining ones about 7 to 5 on Big Board volume of 288.12 million shares, down from 263.55 million the day before.
The lackluster day for stocks came despite a decent showing for bonds amid mixed economic news.
Reports of a boost in consumer confidence eroded some of the optimism sparked by a Labor Department report on employment costs.
The Treasury’s 30-year bond yield fell to 7.10% from 7.15% on Monday. The bond’s price, which moves in the opposite direction, rose 19/32 point, or $5.94 per $1,000 in face value.
The weeklong rally has pushed down long-term bond yields about a third of a percentage point since April 18, when the Federal Reserve Board raised short-term interest rates for the third time this year.
The positive reaction of fixed-income investors contrasted with the market’s sharp negative response to previous Fed rate hikes in February and March.
In the stock market, investors seemed unwilling to take positions before a potentially market-moving economic report due Thursday. U.S. financial markets are closed today in honor of Nixon, who died Friday.
The Conference Board, a New York research group, said its index of consumer confidence jumped 5 points in April to 91.7 and was up 24 points from last April.
Signs of strong economic activity usually upset bond traders, who worry that rapid growth will breed inflation, which devalues fixed interest-bearing investments.
Good inflation news, however, muted the impact of the confidence report. The Labor Department said its employment cost index, considered one of the best gauges of wage inflation pressures, rose 3.2% in the year ended March 31. That was the smallest increase on record.
Among the market highlights:
* Tobacco stocks were ignited by the news that Britain’s BAT Industries has agreed to pay $1 billion in cash for American Tobacco, a division of American Brands, which jumped 2 7/8 to 34 5/8 in active NYSE trading.
* Other heavily traded tobacco stocks were RJR Nabisco, which gained 3/8 to 6 7/8 in Big Board-leading volume, and Philip Morris, which moved up 2 to 54 1/4.
* Healthy quarterly results helped Disney gain 1 1/8 to 43 1/2. An unexpectedly poor report drove the insurer UNUM’s stock down 4 1/4 to 50 1/4. AST Research rose 3/4 to 19.
* Minnesota Mining & Manufacturing rose 1 to 48 3/4. Prudential Securities upgraded the stock’s rating to “buy.”
* Oil stocks came under pressure. Chevron fell 1 3/4 to 90 7/8 after it reported a 23% plunge in earnings. Texaco slipped 1 1/4 to 64 3/8.
* RHI Entertainment surged 9 1/8 to 35 5/8 on the American Stock Exchange in response to news that Hallmark Cards will acquire all outstanding RHI shares for $36 each.
* One big loser was the Mexican issue Gupta, which tumbled 9 3/4 to 13 1/2 and headed the Nasdaq list of active stocks.
Overseas markets turned in a mixed performance. In Europe, the Frankfurt DAX 30-share average index ended at 2,243.20, up 1.86% or 40.98 points; London’s Financial Times 100-share average ended 19.2 points higher at 3,125.3.
In Tokyo, the 225-share Nikkei average closed down 80.21 points at 19,628.93.
Mexico’s Bolsa index came on strong in late trading to close 93.05 points higher at 2,284.13, on expectations of a drop in Mexican interest rates and news of a multibillion-dollar currency swap agreement among the United States, Canada and Mexico.
In other markets:
Light, sweet crude oil fell 33 cents to $16.91 a barrel on the New York Merc. Gold rose on the New York Comex to $373.90 an ounce, up 50 cents; silver fetched $5.173, up 4.5 cents.
Elsewhere, the dollar was mostly lower against major foreign currencies. Traders had expected the greenback to gain from the latest batch of U.S. economic news.
