Dow Stages Late Rally From 29-Point Drop; Dollar Gains Slightly

L.A. Times Archives

May 20, 1995 12 AM PT

From Times Wire Services

A day after Wall Street’s worst stumble in six months, blue-chip stocks rebounded out of deeply negative territory Friday to finish fractionally higher, while the broad market closed mixed.

Bond yields closed moderately higher and the dollar rose slightly against most major currencies.

Many traders dismissed the market’s behavior as the result of expiring options and futures contracts, which often inject volatility into prices and inflate the volume of trading.

If anything, they said, the so-called double-witching expirations had a positive effect on stock prices. Nonetheless, it remains to be seen whether the Dow Jones industrial average’s dramatic 81-point drop Thursday will resume next week, further eroding gains from a prolonged bull market.

The Dow rallied from a 29-point loss at midday to finish up 0.69 point at 4,341.33. But the Dow transportation and utility indexes, which many market participants view as key barometers, lost ground. The transports fell 13.28 points to 1,626.66 and the utilities edged 0.59 point lower to 195.49.

The market started lower at the open in continuation of Thursday’s selloff. But the selling quieted in the afternoon, and technology issues, a long-term market leader, improved.

Treasury bond yields rose in a quiet session ahead of a week’s worth of auctions that will boost supply and could pressure prices.

At the close, the key 30-year bond yield was 6.92%, up from 6.89% on Thursday. Its price, which moves in the opposite direction, was down 11/32 point, or $3.44 per $1,000 in face value.

In the broader market, declining issues led advances 1,309 to 859 on the New York Stocks Exchange, with 356.43 million shares changing hands.

The NYSE’s composite index and Standard & Poor’s 500-stock ended fractionally lower, while the Nasdaq composite index and the American Stock Exchange’s market value index edged higher.

The dollar was slightly lower against the Japanese yen but higher against most other major currencies amid optimism that Congress is serious about tackling the bulging U.S. budget deficit.

In New York trading, the dollar finished at 86.85 Japanese yen, down from 86.93 on Thursday. It rose to 1.446 German marks, up from 1.440.

Among Friday’s highlights:

* Cyclical stocks, which move sharply with changes in economic outlook, were under pressure for most of the day but finished mixed, as investors worried that the economy may be slowing down enough to cut into corporate earnings.

* Chrysler slipped 1/4 to 42 3/8, while General Motors added 3/4 to 46 3/8.

* Georgia Pacific fell 3/4 to 77 1/2. Caterpillar was down 1 1/8 to 59 3/4, but DuPont rose 1/2 to 67 1/2.

* Banking and brokerage stocks were mostly lower, as investors feared that rising interest rates would squeeze margins at financial institutions. Citicorp was down 3/4 to 49 1/2 and Morgan Stanley was off 1 3/4 at 74 5/8.

* Technology stocks, which have led the market higher for some time, turned positive after putting in a mixed morning. Intel rose 5/8 to 111 3/8, IBM rose 1/4 to 93 3/8, Microsoft gained 3/4 to 85 3/8 and Cisco Systems added 9/16 to 44 9/16.

* Callaway Golf rose 1 5/8 to 13 7/8 on rumors that American Brands was preparing a takeover offer for the company. Callaway denied the rumors.

* General Mills fell 3/4 to 58 after Salomon downgraded the stock.

Stocks ended lower overseas, with Tokyo’s Nikkei-225 average off 171.71 points at 16,140.85. Germany’s 30-share DAX average fell 22.0 points to 2,065.13, and London’s the Financial Times 100-share average lost 24.8 points to close at 3,261.0.

Market Roundup, D3

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Interest Rates:

30-year T-Bond: 6.92%

1-year T-Bill: 5.99%

Selected Interest Rates

Averages of daily rates ended Thursday, in percent

Corporate AAA bonds: 7.62%

90-days CDs: 6.03%

3-month Treasury bills: 5.68%

Bank prime rate: 9.00%

Federal funds rate: 6.02%