FINANCIAL MARKETS : Bank Issues Up in Otherwise Mixed Session
The stock market finished mixed Monday, as a surge in bank stocks was offset by a renewed plunge in technology issues.
Apart from those two sectors, activity was subdued as Wall Street awaited key economic reports later this week--including Friday’s government report on August employment.
The Dow Jones industrial average eased 7.40 points to 4,594.00, unable to sustain Friday’s mini-rally despite news of another mega-merger in the banking sector.
The intended marriage of Chase Manhattan and Chemical Banking sent bank stocks soaring as some investors hunted for the next potential takeover candidate in the rapidly consolidating banking field.
The Nasdaq bank stock index jumped 11.09 points, or 1.2%, to a record 933.08 in the wake of the Chase-Chemical deal.
But broader Nasdaq indexes were dragged lower by continued profit taking in the formerly red-hot technology sector.
Analysts said some investors and traders were using worries about the sales success of Microsoft’s new Windows 95 software program to justify bailing out of tech issues in general.
Microsoft slumped 4 5/16 to 90 1/16 and semiconductor giant Intel fell 1 3/4 to 58 5/8. The two tech bellwethers now are down 18% and 25% from their 1995 highs, respectively.
The technology-heavy Nasdaq composite index dropped 11.82 points, or 1.2%, to 1,008.15.
In the broader market, losers topped winners by 19 to 16 on Nasdaq, while winners had a slight edge on the NYSE.
Big Board trading volume came to just 268 million shares, which traders said partly reflected the traditional August market blahs, with many investors vacationing.
In the bond market, activity was thin, although bonds held on to Friday’s gains, when yields dropped sharply on a surprisingly weak durable-goods-orders report for July.
Some analysts remain optimistic that this Friday’s August employment report will be weak enough to trigger new hopes for an official interest rate cut by the Federal Reserve Board this fall.
In Monday’s trading, the yield on the 30-year Treasury bond held steady at 6.70%. Shorter-term yields were also mostly unchanged.
Meanwhile, the dollar drifted lower against the German mark in languid trading, as the German currency gained further ground from the surprise resignation of France’s finance minister.
French Prime Minister Alain Juppe shocked the currency market Friday with the announcement that Alain Madelin had resigned. Juppe said the finance minister had been too aggressive in instituting fiscal reforms.
The political uncertainty caused currency dealers to unload their French franc holdings and seek refuge in the more stable mark, which served to undermine the strength of the dollar.
In New York, the dollar eased to 1.465 marks, from 1.471 on Friday, and to 96.69 Japanese yen from 96.70.
Among Monday’s highlights:
* Chase Manhattan topped the Big Board’s list of active issues, spurting 6 5/8 to 59 5/8 on news of its stock-swap merger with Chemical. Chemical shares, in turn, soared 5 3/4 to 60 1/8 as investors applauded the deal.
Other major bank stocks rising on takeover speculation included Mellon, up 1 5/8 to 43 5/8; Barnett Banks, up 1 3/8 to 57 1/8; J.P. Morgan, up 1 5/8 to 73 1/2; First Interstate, up 3 3/4 to 93 1/8; Norwest, up 1 to 30 1/2, and BankAmerica, up 1 3/8 to 56 3/4.
Even Chemical-Chase’s archrival, Citicorp, gained 7/8 to 66 1/2.
* Southland S&L; stocks also rallied on takeover speculation. H.F. Ahmanson rose 1 to 22 7/8, Great Western Financial gained 5/8 to 21 1/2, Coast Savings jumped 1 to 23 7/8, CenFed rose 7/8 to 21 3/8 and California Federal added 5/8 to 14 3/8.
* On the downside, technology issues were broadly lower with Microsoft. Apple dropped 1 3/4 to 43, Adobe Systems slumped 3 3/8 to 55 1/2, IBM fell 2 1/4 to 101 5/8, Texas Instruments lost 3 5/8 to 70 7/8 and Seagate was off 2 1/4 to 44 1/4.
Other tech losers included Spyglass, off 3 3/4 to 37 1/2; DSC Communications, off 2 1/4 to 52 1/2, and Broderbund, which lost 3 1/2 to 68.
* Some retail issues also saw profit taking. May Department Stores slumped 1 3/8 to 42 3/4, Dayton Hudson dropped 1 5/8 to 72 3/8, Sears fell 7/8 to 34 1/4 and MacFrugals fell 1 3/8 to 16 1/8.
* On the plus side, some transportation issues rallied. Conrail rose 1 1/2 to 71 5/8, Northwest Air gained 3/4 to 37 1/4 and UAL, parent of United Airlines, was up 2 to 155 7/8.
In foreign trading, Paris’ CAC-40 stock index plunged 47.76 points, or 2.5%, to 1,890.05 in the wake of the finance minister’s resignation.
In Tokyo, stocks ended higher, with the Nikkei index of 225 selected issues up 76.61 points to 17,847.29. In Mexico, the Bolsa index ended at session highs, up 30.60 points at 2,493.51. London’s market was closed for a holiday.
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Bank Shares Surge -- Again
Stocks of major banking firms jumped on Monday after the Chase-Chemical deal was announced, adding to the already large gains many of the shares have racked up this year.
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1995 Mon. close Pct. Bank high-low and change change Chase Manhattan $59.63-$32.63 $59.63, +6.63 +12.5% Chemical Banking 60.13-35.75 60.13, +5.75 +10.6% Sumitomo Bank Cal. 25.50-22.00 23.50, +1.50 +6.8% First Interstate 93.13-67.25 93.13, +3.75 +4.2% Mellon Bank 44.88-30.63 43.63, +1.63 +3.9% Norwest Corp. 30.50-22.63 30.50, +1.00 +3.4% BancOne 35.13-25.13 33.88, +0.88 +2.7% BankAmerica 56.75-39.50 56.75, +1.38 +2.5% Barnett Banks 57.13-38.25 57.13, +1.38 +2.5% Wells Fargo 187.38-141.00 186.75, +2.63 +1.4% Citicorp 66.50-38.50 66.50, +0.88 +1.3% NationsBank 62.13-44.63 62.13, +0.63 +1.0%
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Source: Reuter
