Post-4th Fed Watch Makes for Dull Session
Stocks inched higher Tuesday as bond yields dipped in light post-holiday trading, and as financial markets nervously awaited the outcome of a Federal Reserve Board policy meeting.
Meanwhile, the dollar rose against the Japanese yen but fell against major European currencies as doubts grew that a weekend meeting of the Group of Seven industrialized nations will come up with a major rescue plan for the dollar.
On Wall Street, stocks churned in an uneventful session, with the Dow industrials adding 5.83 points to 3,652.48.
In the broad market, advances narrowly outnumbered declines on the Big Board, where volume was a slow 195.4 million shares. Many investors and traders had not yet returned from Monday’s Independence Day holiday.
Analysts said the few players in the market were apprehensive about the outcome of the Fed policy meeting, which began Tuesday and continues today.
Although there has been speculation that the Fed might lean toward raising short-term interest rates again to keep inflation at bay and help prop up the sagging dollar, many analysts expect the central bank to pursue a steady policy course for now.
Some analysts said the Fed probably wants to see this Friday’s government report on June employment to get a better handle on the economy’s strength. A big gain in jobs in June could convince the Fed that the economy warrants slightly higher interest rates to moderate its growth.
In the bond market, yields finished a bit lower Tuesday, helped by another steep fall in grain prices. The Commodity Research Bureau index slid 3.30 points to 226.73 as grain prices sank on news of more Midwest rain.
Falling commodity prices reduce inflationary pressures, which in turn can take upward pressure off interest rates. The yield on the Treasury’s 30-year bond eased to 7.58% from Friday’s 7.60%.
In currency trading the dollar gained against the yen, to 98.90 yen in New York from 98.55 Friday. But the dollar fell to 1.580 German marks from Friday’s 1.596.
Among the day’s stock market highlights:
* Technology stocks failed to respond well to news that computer networker Wellfleet Communications intends to buy SynOptics Communications. Wellfleet dove 5 3/16 to 20 1/16; SynOptics fell 1 1/8 to 14 5/8. Some analysts questioned SynOptics’ value to Wellfleet.
Among other falling tech issues, Cabletron Systems fell 2 to 96, Newbridge Networks lost 7/8 to 34 1/2 and Cisco Systems eased 5/8 to 22 15/16.
* Oil stocks were strong. Light, sweet crude oil futures for delivery in August rose 9 cents per barrel to $19.62. Texaco rose 3/4 to 60 7/8 after unveiling a corporate restructuring. Among other oils, Arco gained 1 3/8 to 103, Phillips jumped 1 3/4 to 33 1/2 and Mobil rose 1 3/8 to 82 5/8.
* Boeing rose 3/4 to 47 1/8 on the company’s report that it delivered 67 commercial airliners in the second quarter, slightly more than some analysts had expected.
Overseas, a rebound in the dollar against the yen buoyed Tokyo markets, leading the Nikkei average up 202.44 points to 20,834.37.
Frankfurt’s DAX average ended at 2,032.69, down 21.71 points, while London’s FTSE-100 index lost 5.4 points to 2,965.0.
In Mexico City, the Bolsa index rose 8.52 points to 2,276.06.
