Stocks, Bonds Hold Steady; Grains Decline
Wall Street slipped into pre-holiday mode on Thursday, as stock and bond markets barely budged in slow trading.
Meanwhile, commodity prices continued to decline, led by falling grain prices. Gold also fell.
Overseas, most European stock markets stabilized after plunging Wednesday.
In the U.S. stock market, the Dow industrials inched down 1.84 points to 3,753.46 as a surge in Boeing shares was offset by a plunge in Philip Morris shares.
Broader market indexes also were mostly flat, though winners topped losers by 12 to 9 on the New York Stock Exchange. Trading volume was 256 million shares, typically slow heading into a holiday weekend.
Analysts said some investors were reluctant to bet on stocks ahead of next week’s heavy calendar of economic reports. If the reports are stronger than expected, bond yields could surge again, undercutting stocks’ recent rally.
Among the economic reports due next week are April home sales and leading indicators, and May employment.
Bonds also marked time Thursday as traders awaited today’s Capitol Hill testimony by Federal Reserve Board Chairman Alan Greenspan.
The yield on the Treasury’s 30-year bond edged up to 7.35% from 7.34% on Wednesday, but shorter-term yields eased slightly.
The bond market paid little attention to another slide in key commodity prices, which ordinarily would be viewed as good news by inflation-wary investors.
The Commodity Research Bureau index of 21 commodities fell for a third straight day, losing 1.98 points to 229.61.
Grain prices led the decline, as rain fell in the dry Midwest. Coffee and cocoa, which have rocketed recently on supply worries, also continued to retreat as profit takers bailed out.
July coffee futures tumbled 9.95 cents to $1.18 a pound at the Coffee, Sugar and Cocoa Exchange.
In metals trading, near-term gold futures fell $2.90 an ounce to $383.90 on the Comex.
Overseas, concern about a potential rout in European stock markets abated, as the tone of most markets improved following Wednesday’s plunge.
European stocks had been hammered on fears that interest rates may not fall further there, even though the economy is still struggling to emerge from recession.
“Interest rates could go up; that concern is with us for the moment,” said Peter Furlong, head of equity trading at Daiwa Securities Ltd. in London.
Still, London’s FTSE-100 stock index eased just 1.0 point to 3,019.70, after slumping 68.4 points Wednesday.
Paris, Zurich and Stockholm shares managed small rebounds. But Frankfurt’s DAX index lost 28.52 points to 2,130.25.
European bond markets were generally steady after Wednesday’s selloff.
Among U.S. market highlights:
* Philip Morris shares plunged 3 1/8 to 50 5/8 in heavy trading as investors expressed disappointment that the company’s directors voted against splitting Morris’s food and tobacco businesses. Trading in the stock had been suspended all day Wednesday, pending the decision.
* Boeing soared 2 1/2 to 47 on a report in the Wall Street Journal that the company is near a deal with China for more than 50 commercial airliners, valued at more than $5 billion.
United Technologies rose 5/8 to 65 1/2 on speculation that its jet engine division may get some of the business from the possible Boeing-China deal.
* Drug stocks were strong. Upjohn surged 3 7/8 to 33 on a new round of rumors about a possible takeover deal. Other drug winners included Warner-Lambert, up 1 1/2 to 72; Lilly, up 1 1/4 to 57 3/8, and Schering-Plough, up 1 1/8 to 66 5/8.
* Among tech issues, mainframe software firm Computer Associates rocketed 6 to 43 1/8 after its quarterly earnings came in well ahead of Wall Street expectations.
But Lotus Development lost 2 to 61 1/8. Some analysts were disappointed in the company’s earnings predictions Wednesday.
* Among Southland issues, two insurance firms rebounded. 20th Century rose 3/4 to 15 7/8 and Mercury General jumped 1 5/8 to 30.
In other overseas markets, Tokyo’s Nikkei 225-share average fell 167.83 points to close at 20,495.80. Mexico City’s Bolsa index declined 16.71 points to 2,455.45.
In currency trading, the dollar rose, rebounding from an early drop as many traders concluded that the world’s central banks would step in to rescue the dollar if it fell any further.
The dollar closed in New York at 1.648 German marks, up from 1.645 on Wednesday. It also fetched 104.65 Japanese yen, up from 104.35.
Market Roundup, D6
FINANCIAL MARKETS / May 26, 1994
Dow Jones Industrials High: 3,785.07 Close: 3,753.46 Low: 3,722.76 New York Volume 256.05 million shares Interest Rates 30-year T-Bond: 7.34% 1-year T-Bill: 5.19%
