FINANCIAL MARKETS : Dow Climbs 6.8 as Investors Ponder Rates
Stocks crawled to a mostly higher close Monday as investors studied corporate earnings reports and pondered the Federal Reserve Board’s next potential move on interest rates.
The Dow Jones industrial average added 6.80 points to 3,741.84, and most broader indexes also closed with small gains.
Volume was typically slow for a summer Monday, at just 213 million shares on the New York Stock Exchange. Big Board winners and losers were nearly even.
Aside from some nibbling in blue chips, traders complained of a general lack of investor interest beyond the usual summer doldrums.
Indeed, despite healthy second-quarter earnings reports, stocks have only been able to inch ahead since July 1.
Many investors remain worried about another official hike in short-term interest rates by the Fed. Alan Greenspan, the Fed chairman, appeared to warn about another rate boost in congressional testimony last week.
In the bond market, where short-term interest rates rose sharply last week in response to Greenspan’s comments, activity was bland Monday. Short-term rates were unchanged and long-term yields slipped. The key 30-year Treasury bond yield fell to 7.52% from Friday’s 7.56%.
The action could turn hotter for bonds today and Wednesday: The Treasury will auction $17.25 billion in two-year notes today and $11 billion in five-year notes Wednesday.
In currency markets Monday, the dollar declined in quiet trading. It eased to 1.590 German marks from 1.598 on Friday and to 98.75 Japanese yen from 98.90.
Among Monday’s stock market highlights:
* A slew of energy company earnings reports--mostly showing lower results than a year ago--left the stocks mixed. Mobil eased 3/8 to 84 1/2, Unocal fell 3/4 to 29 1/4 and Arco lost 7/8 to 107, but Texaco was unchanged at 63 and Exxon added 3/8 to 58 1/4.
* Other stocks reacting to earnings reports included American Brands, which jumped 1 1/2 to 34 1/8; Clark Equipment, up 2 to 66 3/4; Black & Decker, up 1 1/4 to 18 3/4; Cap Cities/ABC, up 1 1/4 to 79 3/4; U.S. Healthcare, down 1 1/2 to 35 3/4, and Goodyear, which lost 7/8 to 35 1/2.
* Some industrial issues continued to attract buyers. ITT gained 2 to 86, Nucor leaped 1 3/8 to 70 7/8 and USX-U.S. Steel rose 1 to 38.
* Some major drug stocks also sparked to life. Johnson & Johnson gained 1 3/8 to 46 3/4, Pfizer surged 1 5/8 to 61 5/8 and Schering-Plough added 1 1/4 to 63 5/8.
* Casino giant Circus Circus slumped 1 1/8 to 25 1/2 after Bally Entertainment said it sold its stake in the firm, apparently ending any threat of a possible takeover bid. Bally lost 1/8 to 6 3/4.
* McDonnell Douglas fell 3 3/4 to 111 1/4 after the company said it is testing the market for a possible new 100-seat commercial jet. Salomon Bros. downgraded the stock to “hold” from “buy,” saying development of the jet would be costly and that the plane would compete in an already-crowded market.
* Among the day’s biggest losers, Radica Games plunged 3 3/8 to 5 5/8 after the maker of hand-held electronic games, including poker and blackjack, said its fiscal third-quarter sales will be below analysts’ estimates. The firm cited production problems.
Overseas, Tokyo’s market continued to churn, with the 225-share Nikkei average down 165.23 points at 20,297.66.
In Europe, Frankfurt’s 30-share DAX average closed at 2,136.22, down 14.04 points, and London’s FTSE-100 index was off 8.6 points at 3,106.1.
In Mexico City, the Bolsa index added 13.28 points to end at 2,313.94. The Bolsa had jumped 67.85 points Friday after a bullish earnings report from Telmex. In NYSE trading Monday, Telmex inched up 1/8 to 57 1/4 after leaping 1 5/8 on Friday.
