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Dow Drops 2.25 After Early Advance Falters

November 13, 1986|From Times Wire Services

NEW YORK — The stock market settled back a bit Wednesday after an early advance faltered at the 1,900 level in the Dow Jones industrial average.

The Dow Jones industrial average, up more than 4 points in early trading, closed with a 2.25-point loss at 1,893.70.

Volume on the New York Stock Exchange stepped up to 162.19 million shares from 118.52 million on Tuesday, when many market participants were absent because of the observance of Veterans Day.

Analysts said traders remained hopeful that the pace of business activity was picking up without exerting any significant upward pressure on interest rates or inflation.

However, the Dow 1,900 level is still widely regarded by technical analysts as an area of strong resistance for the market to overcome.

They note that the sharp drop in stock prices that occurred in early September began at around that point. The Dow established its record closing high of 1,919.71 on Sept. 4.

The next major statistics on the state of the economy are due on Friday, when the government reports on producer prices, retail sales and industrial production for October.

Eastman Kodak was a standout performer among the Dow industrials, climbing 3 to 65 1/2 in active trading. The company said it expected to post record sales this year and sees 1987 as "a year of very substantial gains in operating earnings."

Pandick jumped 7 1/8 to 23 7/8. The company said it received a proposal from a group including some of its top executives for a buyout at $25.50 a share.

Johnson Controls gained 5 3/8 to 63 3/4 amid takeover talk. The company said it knew of no reason for the rise in the stock's price.

E. F. Hutton, which has been the subject of recurring takeover speculation, rose 1 5/8 to 47.

Declining issues outnumbered advances by about six to five in the overall tally on the NYSE, with 696 up, 842 down and 466 unchanged.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 190.99 million shares.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,418, compared to 2,439 on Tuesday.

Bond trading was relatively quiet as the credit markets returned to full action following the lull during Tuesday's Veterans Day holiday, when cash U.S. Treasury markets were closed.

The bellwether 30-year Treasury bond rose nearly 3/8 point, with the yield dipping to 7.59% from Monday's 7.62%.

Prices were little changed by midday but pushed higher after the Fed began purchasing coupon securities to fill a seasonal need for supplying reserves to the banking system, said Jeffrey Leeds, money-market economist for Chemical Bank Capital Markets Group.

In corporate trading, Salomon Bros. said industrials and utilities were up 3/8 point in moderate to active trading. Among tax-exempt municipal bonds, general obligations rose 3/8 point in moderate trading and revenue bonds were up 5/8 in active dealings.

Yields on three-month Treasury bills were off 4 basis points to 5.37%. Six-month bills fell 2 basis points to 5.49%. One-year bills were off 3 basis points at 5.54%. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, traded at 5.9375%, up from 5.875% late Monday.

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