FINANCIAL MARKETS : Dollar, Dow Have a Down Kind of Day
The dollar mostly fell in foreign exchange trading Tuesday as a government report on inflationary pressures further reduced hopes that the Federal Reserve Board might raise interest rates to help the troubled currency.
Blue-chip stocks also fell as investors took profits before a wave of first-quarter corporate earnings reports hits later this week, and bond yields moved lower on signs that the economy is growing but not at a pace that threatens high inflation.
In New York, the dollar was quoted at 83.60 Japanese yen, down from 83.90 yen on Monday. It also closed at 1.402 German marks, down from 1.410. Traders remained cautious in anticipation of an announcement Friday from Japan on measures intended to help stop the yen’s appreciation.
The U.S. currency was pressured by a government report suggesting that the economy is still on the Fed’s track for a “soft landing.” The Labor Department said its producer price index, after having posted worrisome gains of 0.3% in both January and February, showed no increase in March. That lessens pressure on the Fed to raise interest rates at its next policy-setting meeting in May. Higher rates would tend to help the dollar by making dollar-denominated investments more attractive.
On Wall Street, the stock market started out on solid ground but began slipping as the bond market deteriorated. When bonds recovered, stocks stayed at depressed levels.
Bonds and stocks began moving down on reports that a Fed governor had implied it would be wrong to assume that the central bank has put its credit tightening on hold indefinitely.
After surrendering an initial gain inspired by the favorable inflation news, the Dow Jones industrial average displayed negative readings throughout the session; it finished off 11.07 points at 4,187.08. Broader stock gauges also declined.
The New York Stock Exchange composite dipped 0.69 point to 273.29, and the Standard & Poor’s 500-stock index fell 1.48 points to 505.53. The American Stock Exchange market value index shed 0.50 point to 470.73.
The technology sector offered a bright spot, however. Stocks of computer chip companies were particularly strong performers, which gave a boost to the Nasdaq Stock Market. Its composite index climbed 3.57 points to 824.83.
Losers had a slight edge over gainers on the NYSE; a closing tally showed 1,123 stocks down and 1,066 up. Big Board volume expanded to 310.66 million shares, from 260.99 million on Monday.
In the bond market, the Treasury’s key 30-year bond yield fell to 7.37% from 7.40%; its price, which moves in the opposite direction, rose 13/32 point, or $4.06 per $1,000 in face value.
Among the Tuesday’s highlights:
* Kemper shot up 4 3/8 to 45 3/4 after it was announced that the financial services company has agreed to be acquired for about $2 billion.
* Advanced Micro Devices lost 3 1/4 to 33 1/2. The firm said its K-5 microprocessor, the chip it developed to compete with Intel Corp.’s Pentium, will not be available until early 1996. Intel jumped 2 3/4 to 91 1/4.
* Microsoft rose 1 3/16 to 72 1/8 and Adobe Systems added 2 3/8 to 53 1/8.
* Atmel rose 2 1/2 to 42 1/2 after the company said it is acquiring a majority interest in the Luxembourg-based company European Silicon Structures.
* CBS and Motorola both ended lower after their earnings did not meet analysts’ expectations. CBS fell 2 1/2 to 63 1/8 and Motorola lost 1 7/8 to 54 5/8.
Market Roundup, D8
