Dollar Makes More Gains; Stocks Mixed : Wall Street: Greenback surpasses previous day’s yen and mark exchange rates. Bond prices rise.
The dollar strengthened Wednesday against the Japanese yen and German mark, following a course established Tuesday when the Federal Reserve--in a surprise move--intervened in foreign currency markets and bought the dollar in concert with German, Swiss and Japanese central banks.
The currency rose to its highest levels against the yen and mark in nearly six months after the intervention.
In New York, the dollar was quoted at 97.78 yen in late afternoon trading, up from its 96.94 exchange rate Tuesday. The dollar rallied overnight in Tokyo, hitting about 99 yen, its highest level there since mid-February.
The dollar also was trading in New York at 1.4782 marks, up from 1.4778. The dollar came under some pressure after the German Bundesbank did not cut its 14-day securities repurchase rate, as many had expected the central bank to do.
Lower rates would boost the dollar by making mark-denominated interest rates less attractive to investors.
Stocks ended mixed Wednesday as U.S. multinationals lost ground to technology issues amid concerns that a strong U.S. dollar would erode profits from overseas operations.
The interest in high-tech stocks sent the Nasdaq stock market surging 13.38 points to end at 1,025.75, higher than Monday’s record close of 1,012.44.
But the Dow Jones industrial average ended little changed as signs of economic strength and stable bond prices offset the effects of dollar concerns. The average fell 1.76 points to end at 4,639.08.
Broader gauges ended higher. The New York Stock Exchange composite rose 0.64 points to 299.84, and the Standard & Poor’s 500 rose 1.40 points to 559.97. The American Stock Exchange market value index rose 1.95 points to 526.47.
Advancers led the Big Board’s advance-decline tally by 11 to 8. Volume on the NYSE floor expanded to 390.52 million shares from 262.43 million shares on Tuesday.
Among Wednesday’s highlights:
* Shares of Procter & Gamble fell 1 1/8 to 67 1/4, Eastman Kodak shares lost 1 1/4 to 58 7/8 and Coca-Cola fell 1 to 64 1/2 as investors decided the dollar’s strength was a negative for these companies.
* Technology stocks benefited from the flight out of blue chips. In Nasdaq trading, Applied Materials surged 14 1/2 to 118 1/4. The chip fabrication equipment company reported higher-than-expected second quarter earnings on Tuesday.
A strong U.S. currency makes U.S. assets such as government securities more attractive to investors, a factor that boosted bond prices later in the day. That took some selling pressure off the stock market, analysts said.
The price of the Treasury’s main 30-year bond rose 3/32 point, or 94 cents per $1,000 in face value. Its yield, which moves in the opposite direction, slipped to 6.88% from 6.89 percent late Tuesday.
“The dollar is having an interesting impact,” said Alfred E. Goldman, vice president at A.G. Edwards & Sons Inc. in St. Louis. “On balance it’s a positive.”
Aside from dollar concerns, Goldman attributed Wednesday’s stock weakness to technical factors.
In economic news, the Commerce Department said housing starts shot up 6.7% in July, the fourth straight monthly advance and the biggest in 16 months, as builders sought to meet buyer demand strengthened by lower mortgage rates.
The report, more positive than had been expected, sent bond prices lower Wednesday morning because it may mean that the Federal Reserve Board could hold off lowering interest rates at a key rate policy meeting next week. Bonds later recovered on the dollar’s strength.
The surge in summertime home construction ignited a rally in lumber prices on the Chicago Mercantile Exchange, with three contracts posting limit gains of $10 per 1,000 board feet. Lumber for delivery in September was bid up the $10 limit at $288.50 per 1,000 board feet.
September copper rose to a contract high of 143.00 cents a pound on New York’s Commodity Exchange amid concern that supplies will tighten on the stronger demand indicated by the housing data. September copper ended 2.80 cents higher at 141.75 cents on New York’s Commodity Exchange.
Crude oil futures on the New York Mercantile Exchange bounced back from early losses to ended higher, with September closing 8 cents higher at $17.55 a barrel.
But September gasoline ended down 0.90 cent a gallon, depressed partly by Exxon’s announcement that it will restart a 135,000 barrel-a-day refinery unit in Baytown, Tex.
In overseas trading, the dollar’s rally pushed stocks up in Tokyo. The Nikkei-225 stock index jumped 701.01 points, or 4%, to close at 1,8158.73.
London’s FTSE-100 closed 20.7 points higher at 3,465.1.
Markets Roundup, D6
