FINANCIAL MARKETS : Stocks End Mixed in 2nd Low-Volume Day of Trading
Stocks ended mixed Wednesday, as investors had little reaction to reports of slowing economic activity. The prospect of lower interest rates helped push the 30-year Treasury bond yield below 6% during bond market trading.
The Dow Jones industrial average closed down 4.34 at 5,105.92, after relinquishing a gain of 16 points posted early in the session. Other general indexes ended slightly higher. Volume was light for a second day.
“It looks like the institutional types did whatever they had to do before the Christmas break. It’s almost a nothing day,” said William LeFevre, a senior market strategist at Ehrenkrantz King Nussbaum.
“Everyone’s calling each other on Wall Street to see if people are awake,” one analyst quipped.
Tuesday, the day after Christmas, was the slowest full-day in 1995, with 217 million shares changing hands on the NYSE.
In Tokyo the Nikkei average closed above 20,000 for the first time in more than 14 months. Optimism that new regulations in Japan would allow more overseas investing helped the dollar rise against the yen and other major currencies.
New data confirming a slowing economy sent yields lower, with long Treasury bond’s yield ending the day at 6%. Analysts detected fresh hope among investors for another interest rate cut by the Federal Reserve Board, fueled by a double dose of sluggish economic news.
The Conference Board, a prominent business research group, said its widely followed monthly index of consumer confidence fell to 98.7 in December from 101.6 in November. And adding to the slow economy scenario, the National Assn. of Realtors reported that sales of previously owned homes dropped 1.7% last month, the second straight decline.
On the NYSE, advancing issues edged out decliners by about 6 to 5.
Computer-related stocks retreated but biotechnology stocks, which are well represented in broad-market indexes, performed well.
Analysts and traders attached little significance to the market’s behavior Wednesday because of the thin volume. At the market’s currently lofty levels, it takes a big move to get anybody excited, said Tony Spare, chairman of Kaplan, Bischel & Associates in San Francisco.
“Unless it moves 1%, I don’t even pay attention,” he said, “and I really don’t focus unless it’s 2%.”
Among market highlights:
* Computer stocks fell amid concerns about weak holiday sales, traders said. IBM ended 1/4 higher at 92, but Compaq lost 1 1/8 to 48 3/4. Intel fell 1/2 to 58 7/8, Cisco Systems lost 5/8 to 76 3/4, and Microsoft slid 1 3/8 to 88 7/8.
* Biotech stocks, however, did well. Amgen gained 5/8 to 58 1/4 in Nasdaq trading. Centocor added 2 1/8 to 31 3/4, and Biogen advanced 1 1/2 to 62. Biotech stocks have gained lately because of drug approvals and clinical trial successes.
* Auto stocks fell amid word that the Big Three auto makers were issuing unimpressive sales projections for 1996. Chrysler’s shares fell 3/8 to 54 3/4, Ford fell 5/8 to 29, and GM dipped 1/2 to 42.
* Fannie Mae stock shot up 5 1/4 points to 125 on the Big Board after it announced a capital restructuring program that includes a 4-for-1 common stock split.
Among other financial stocks that gained on hopes of lower interest rates, Bankers Trust New York rose 1 1/4 to 67 1/2, First Chicago NBD added 1 5/8 to 39 7/8, Allstate rose 3/4 to 41 5/8, PNC Bank added 1 3/8 to 31 1/2, and Travelers Group added 2 3/8 to 62 3/4.
* Aluminum and copper stocks fell amid concern that demand may fall as 1996 begins. Wednesday, Victor Lazarovici of Smith Barney Inc. lowered estimates on a number of metals companies, mostly because of “weaker shipments” in the fourth quarter.
Alcoa dropped 1 3/4 to 49 3/4, Phelps Dodge slid 3/4 to 60 1/2, Reynolds Metals dropped 1 to 53 and Cyprus Amax Minerals weakened 3/4 to 25 7/8.
Among the biggest losers on the day was Safety 1st, whose shares fell 4 1/8 to 15 1/8. The maker of child-care products expects to report a fourth-quarter loss.
* Cordis slumped 11 1/4 to 95 1/4, after Johnson & Johnson delayed its acquisition of the company.
In Japan, Nikkei trading was not very active but index-linked buying by foreign brokerages pushed the Nikkei up through 20,000 just before the close.
The average finished up 107.04 points at 20,011.76.
Meanwhile in other overseas stock markets, the FT-SE 100 index in London ended higher, while the DAX index in Frankfurt ended unchanged.
Natural gas prices surged again Wednesday ahead of an industry report showing gas held in storage fell further below year-ago levels.
The onset of cold weather in the eastern half of the country has sent gas prices to their highest levels since trading in natural gas futures began at the New York Mercantile Exchange in 1990.
The near February natural gas contract rose 40 cents to $2.868 per 1,000 cubic feet.
After the close of trading, the American Gas Association said the volume of working gas held in storage fell 154 billion cubic feet last week to 2,257 billion cubic feet, nearly 15% percent below the supply at this time a year ago.
