FINANCIAL MARKETS : Markets Take a Breather on Election Eve

The nation’s financial markets held steady Monday as investors marked time on the eve of the general elections and an interest rate hike widely expected next week.

Stocks closed mixed, breaking last week’s losing streak, when the Dow Jones industrial average tumbled more than 123 points, or 3%. On Monday, the Dow rose 1.35 points to 3,808.87. But declining issues still outnumbered advances by about 5 to 3 on the New York Stock Exchange. Big Board volume was a light 256.2 million shares, down from 282.7 million on Friday.

Treasury bond yields rose for a sixth consecutive session, with the benchmark 30-year bond closing at 8.16%, up from Friday’s 8.15%. Its price, which moves lower when yields rise, slipped 3/32 point, or 94 cents per $1,000 in face value.

In the currency markets, worries about further dollar-buying action by the Federal Reserve System in the wake of last week’s two-day intervention helped deter speculative attacks on the U.S. currency, market participants said.

The dollar closed in New York at 97.33 Japanese yen, down from 97.50 on Friday. The dollar was also changing hands in New York at 1.5163 German marks, up from 1.5156.

There was little news to influence trading in the market.

With the recent run-up in bond rates, strategists were nervous about the market’s ability to digest the Treasury’s sale of $17 billion in three-year notes today and $12 billion in 10-year notes Wednesday.

Tight political races and the strong possibility of rising interest rates sapped enthusiasm on Election Day eve, analysts said.

“The elections are causing a little bit of caution on Wall Street,” said Walter Revis, market analyst at Principal Financial Securities. “The market hates uncertainty, and the polls are still going back and forth.”

But politics were not the only thing on investors’ minds.

The producer price index for October, set for release Thursday, and a meeting next Tuesday of the Federal Open Market Committee, which will weigh the central bank’s monetary policy against recent data on inflation, added tension, analysts said.

There is widespread speculation that the Fed will raise interest rates for a sixth time this year. Most analysts expect the Fed to opt for an increase of 0.5% in short-term interest rates, but some say the central bank could be more aggressive in its fight against inflation.

“People are a little skittish for a number of reasons, and they want to see the whites of their eyes before they decide to commit again,” said James Volk, director of equity trading at Jensen Securities.

Despite the recent batch of strong third-quarter earnings, the market has been unable to gather any upside momentum.

Partly to blame is concern that rising interest rates will cool the economy and lead analysts to lower their earnings forecasts for 1995.

“The economy is going on very well, but there’s some thinking that we may be peaking here soon,” said John Church, chief investment officer at Glenmede Trust Co.

Stocks fell abroad. Sporadic corporate selling and arbitrage-linked sales sent Tokyo’s 225-share Nikkei average down 192.34 points to 19,619.22. Frankfurt’s 30-share DAX average closed off 24.04 points at 2,043.52, while London’s Financial Times 100-share average ended down 31.8 points at 3,065.8. In Mexico City, the Bolsa index drifted 6.71 points higher to 2.588.35.

Among the market highlights:

* IBM, Apple Computer and Motorola said they agreed on a new hardware platform design for computers based on the PowerPC chip. IBM ended up 3/4 to 71 7/8, and Apple added 3/8 to 40 3/4, but Motorola lost 2 to 56 1/2.

* Chrysler fell 7/8 to 46 1/2. There was market speculation that investor Kirk Kerkorian will begin selling his 9.2% stake in the No. 3 auto maker.

* Snapple Beverage fell 3/16 to 13 5/8. Quaker Oats last week made a $1.7-billion bid for the maker of fruit drinks and iced teas.

* Nike rose 1 7/8 to 61 1/2. Goldman Sachs added the stock to the firm’s “recommended” list.

* Dell Computer introduced its first multiprocessor network servers, and its shares rose 2 1/8 to 43 7/8.