FINANCIAL MARKETS : Yields Ease but Stocks Still Stalled
An afternoon rally in the bond market came too late to help stocks, which closed mixed on a typically slow summer Monday.
The Dow Jones industrials inched up 1.62 points to 3,755.43 as winner edged losers by 11 to 10 on the New York Stock Exchange. But some other key indexes were off marginally.
Some buyers responded to earnings reports and takeover rumors, but overall many investors remained sidelined.
In the bond market, late buying may have been sparked by a slump in crude oil prices, as more traders grew convinced that a 2-week-old strike in Nigeria wouldn’t disrupt the country’s oil exports.
On the New York Mercantile Exchange, August oil futures tumbled 38 cents to $19.51 a barrel.
“The perception is that there’s not going to be an impact on exports,” said Morris Greenberg, energy analyst at Lehman Bros. Oil workers called the strike to demand that army rulers free opposition politician Moshood Abiola.
Bond yields fell across the board. The yield on the 30-year Treasury bond slipped to 7.50% from 7.54% on Friday. Monday’s closing yield was the lowest since June 27.
Some analyst said both stock and bond markets may be cautious ahead of Wednesday’s Senate testimony by Federal Reserve Board Chairman Alan Greenspan. He will be giving his semiannual report on monetary policy and the economy.
Also, the dollar continues to show a mixed performance. It rose against the Japanese yen Monday, to 98.35 from 97.85 on Friday, but slipped to 1.547 German marks from 1.553.
Still, some analysts are getting impatient with the stock market. “We’ve got a cooperative bond market, we’ve got solid earnings, we’ve got no economic news,” said Philip Orlando, senior vice president at First Capital Advisers. “The market ought to be working higher, plain and simple.”
Among Monday’s highlights:
* Microsoft dominated trading, rising 1 7/8 to 50 1/2 after trading as high as 51 3/4 in the wake of the company’s weekend antitrust settlement with the government.
Many analysts believe the company’s competitive position won’t be hurt much, if at all, by the settlement’s conditions.
Among Microsoft competitors, many of which expect some marginal benefit from a change in the company’s sales and marketing practices, stocks were mixed. Novell added 5/16 to 17 1/8 and Oracle Systems gained 7/16 to 39 9/16, but Lotus eased 7/8 to 38 3/4 and Borland was flat at 10 1/8.
* Some biotech stocks suffered after Synergen said it discontinued clinical trials of Antril, an infection-treatment drug that had been one of the shining hopes of biotech research in recent years.
Synergen, whose shares traded as high as 65 in 1993, plunged 4 3/8 to 4 1/2. Also falling were Gensia, off 1/2 to 8 3/4; Genzyme, down 15/16 to 25 13/16, and Amgen, which eased 5/8 to 46 3/4. After the close, Amgen reported quarterly earnings up 20%, before onetime items.
* Another round of takeover rumors in the casino industry pushed Hilton Hotels up 2 to 65 1/4 and Circus Circus up 7/8 to 27 7/8.
* Among companies reporting strong earnings Monday, chemical producer Rohm & Haas surged 2 1/2 to 66 3/8, financial services firm Foothill Group gained 5/8 to 13 3/8 and Time Warner added 7/8 to 36 7/8.
Wabash National, a maker of truck trailers, leaped 2 5/8 to 52 after it reporting earnings above expectations.
* Airline stocks were lower after another fare war began over the weekend. Continental Airlines fell 1 to 15 7/8; Delta eased 5/8 to 48 7/8, and AMR, parent of American Airlines, was off 1/2 to 61 3/4.
* Among smaller stocks, Torrance-based MDT inched up 1/16 to 4 15/16. The maker of medical sterilization equipment, responding in part to dissident shareholders unhappy with the company’s performance, said it expects a hiring and pay freeze to save about $1 million in fiscal 1995. The company also said it will shorten workweeks at some plants to reduce inventory.
* Another Southland issue, auto parts maker Superior Industries, eased 1 1/2 to 32. Brokerage Salomon Bros. lowered its rating on the stock to “hold” from “buy.”
Overseas, Tokyo stocks closed lower in thin trading, with the Nikkei 225-share average falling 52.51 points to 20,717.64.
In Europe, Frankfurt’s DAX 30-share average added 4.58 points to 2,098.19, while London’s FTSE-100 index was up 7.2 points to 3,082.0.
In Mexico City, the Bolsa index eased 6.97 points to 2,274.26.
