Dow, Yields Fall on Election Nervousness
Blue-chip stocks were mixed Friday as the market reflected nervousness ahead of Tuesday’s elections.
The Dow Jones industrial average fell 7.45 points to close at 6,021.93. The 30-stock average gained 14.91 points on the week. Other measures were virtually unchanged Friday.
“A lot of traders have stepped to the sidelines to see what the elections will bring,” said Thom Brown, a managing director of Rutherford Brown & Catherwood. “There’s the fear of the Democrats carrying both houses of Congress, and there might be a nervous reaction fearing a return of an inflationary scenario.”
But the bond market for the most part seemed to see little threat of inflation. The yield of the benchmark 30-year Treasury bond briefly slipped to a new seven-month low of 6.59%, but it ended the day higher--at 6.68%, up from 6.64% on Thursday.
“Virtually all the economic data we’ve seen this week suggests that at the Nov. 13 Federal Open Market Committee meeting, talk will begin on an easing,” Tom Carpenter, chief economist at ASB Capital Management Inc., said of the prospect for Fed policymakers to lower interest rates.
Among market highlights:
* The stock of MCI Communications was in the spotlight on news that it is in merger talks with British Telecommunications, which has a 20% stake in MCI. MCI shares zoomed up 5 1/8 to 30 1/4 on Nasdaq before trading was halted for the weekend.
The news stoked buying in Sprint, which rose 4 1/4 to 43 1/2,and some regional Bells. Bell Atlantic was up 1/4 to 60 1/2, Nynex up 1/2 to 45, Pacific Telesis up 1/8 to 34 1/8 and Ameritech up 1/8 to 54 7/8.
* Most of the Dow’s loss could be traced to Boeing, which slid 3 1/2 to 91 7/8--the equivalent of more than 10 Dow points--on reports that developing the next generation of the 747 jumbo jet could cost 40% more than previously thought.
* Inference lost 5 1/4 to 7 after the software producer warned that its third-quarter results would fall below expectations.
* Food Lion class A stock rose 9/16 to 9 1/8. The company said Thursday that it will acquire Kash n’ Karry Food Stores for $26 a share in cash. Kash n’ Karry was up 1 1/2 to 25 1/2.
* Stock in Samsonite Luggage surged 3 3/16 to 36 15/16. The company on Thursday announced a restructuring and plans to cut 450 positions Thursday.
* Circuit City Stores jumped 2 3/4 to 35 1/2 after the retailer said it would sell 15% to 20% of its CarMax auto dealership business to the public to raise money for the unit’s aggressive expansion plans.
* Nike shares fell 5 1/4 to 53 7/8 after Montgomery Securities lowered its second-quarter earnings estimate for the company. Analyst Alice A. Ruth maintained her “buy” rating on the stock.
Overseas, Tokyo’s Nikkei-225 stock average rose 0.8%, Frankfurt’s DAX index rose 0.9% and London’s FTSE-100 fell 0.8%.
Mexico stocks rose for a second day, bolstered by optimism that a stronger peso and lower interest rates will spur a rise in earnings. The Bolsa index surged 42.49 points, or 1.32%, to 3,255.82, its highest price since Oct. 24.
Shares prices rose Friday after the peso strengthened to 12.57 cents, from 12.54 cents Thursday. That enabled the Bank of Mexico to lower the cost of a one-day loan to 32.48% from 33.95%.
Lower interest rates can boost company earnings and thus the size of dividends paid to shareholders.
“As long as the [peso] remains at this level, the more confident the market will become,” said analysts at Stone & McCarthy Research Associates in a report.
Crude oil prices ended lower for the fifth straight day Friday as bearish sentiment tightened its hold on a market shaken by steep losses this week.
Overall, investors continued to exit commodities. The selling pushed the Knight Ridder Commodity Research Bureau’s index of 17 futures down an additional 0.53 point to 237.30, a 12-month low. The index fell 3.83 points Thursday.
Market Roundup, D4
