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Dow Off 10.97 Amid Profit Taking : Market Finishes Mixed as Investors Shuffle Portfolios

February 04, 1987|From Times Wire Services

NEW YORK — Wall Street's upbeat mood continued Tuesday, even though stock prices closed mixed amid some profit taking and portfolio shuffling, analysts said.

At the close, the Dow Jones average of 30 industrials was down 10.97 at 2,168.45. The performance followed Monday's record close of 2,179.42, after a gain of 21.38.

On the New York Stock Exchange Tuesday, advancers led decliners by about eight to seven.

Volume on the Big Board totaled 198.05 million shares.

While the closely watched index moved in and out of positive territory throughout Tuesday's session, the broader measure of winners to losers constantly favored the up side.

"There was some very normal profit taking, in the form of rotation out of big winners into laggards," said Alfred E. Goldman, an analyst at the St. Louis securities firm of A. G. Edwards & Sons Inc. But he stressed that the tone remained upbeat overall.

"The money isn't coming out of the market. It's rotating," Goldman said. During the day, the government issued reports on various aspects of the economy, all of which the market ignored, because "the numbers were in line with expectations," said Ralph J. Acampora, a technical analyst at Kidder, Peabody & Co.

The Commerce Department said its composite of leading indicators for December rose by 2.1%, the biggest increase since January, 1983, while single-family home sales rose 12.7% and factory orders were up 2.1%.

Analysts said the market also generally ignored worries in some quarters that the sagging dollar would scare away foreign investors from the Treasury Department's auction of $29 billion in securities this week--a development that could send interest rates higher.

Michael Metz, an analyst at the securities firm Oppenheimer & Co., said that "rather than squeezing into the bond market," cash-heavy foreigners were choosing to put their money into stocks.

He said investors were generally so bullish that they simply were not worrying about the potentially negative affects of higher interest rates.

"The bulls claim that rates going up means business is expanding capacity, which in turn would justify higher earnings, which in turn justifies higher stock prices," he said.

AT&T led the big board's most-active list at 23, down 1.

IBM rose 3/4 to 133; National Semiconductor Corp. advanced 1/2 to 15, while Digital Equipment was unchanged at 146.

Texaco was up 3/8 to 38 5/8; Unocal was down 5/8 at 29 3/8, and Diamond Shamrock was down 1/8 at 14 1/2.

American Medical International, target of a $20-a-share takeover offer by a unit of Chicago-based Pesch & Co., was up 1 3/8 at 19.

Other Indexes Mixed

General Motors fell 1 3/8 to 76 1/2.

Nationwide turnover in NYSE-listed issues, including stocks on regional exchanges and in the over-the-counter market, totaled 233.91 million shares.

The NYSE index was down 0.17 at 157.28.

Standard & Poor's index of 400 industrials fell 0.44, to 311.09, and S&P's 500-stock composite index was down 0.46, at 275.99.

The American Stock Exchange market-value index rose 1.41 to 305.56. The NASDAQ composite index closed at 399.38, up 2.20.

In the bond market, prices sagged slightly under the weight of the government's big borrowing needs. Interest rates finished little changed.

Traders seemed reluctant to buy or sell heavily as the Treasury held the first auction in a $29-billion, three-part quarterly financing operation, analysts said.

The key 30-year Treasury bond lost about 1/8 point, or $1.25 per $1,000 face amount, and its yield edged up to 7.52% from 7.51% late Monday.

The Treasury's security sales have caused considerable anxiety in the credit markets because traders fear that foreign investors, particularly the Japanese, will have only lukewarm interest in buying.

Weak demand would push up interest rates and drive down prices.

In the first part of the financing package, the Treasury sold $10.06 billion in three-year notes at an average yield of 6.54%, up from 6.42% at the last auction on Nov. 4 and the highest rate since three-year notes averaged 6.73 percent on Aug. 5.

Traders say additional tests of investor demand will come when the Treasury sells $9.75 billion in 10-year notes and $9.25 billion in 30-year bonds on Wednesday and Thursday, respectively.

Concerns of reduced foreign purchases stem from the dollar's declines against major world currencies, which makes dollar-denominated investments less attractive. Japanese and other foreign investors have been major buyers of U.S. government securities in recent years.

In the secondary market for U.S. Treasury issues, short-term governments ended the session off 1/32 point; intermediate maturities were unchanged to down 3/32 point, and 20-year bonds fell 1/16 point, according to Salomon Bros.

The movement of a point is equivalent to a change of $10 in the price of a $1,000 bond.

Yields on three-month Treasury bills fell 1 basis point, or a hundredth of a percentage point, to 5.58%. Six-month bills were unchanged at 5.56%, and year bills were down 2 basis points to 5.58%.

The federal funds rate traded at 6%, down from 6.313% Monday.

In the corporate bond market, industrials fell point and utilities were unchanged in light trading to moderate trading volume.

Among tax-exempt municipal issues, general obligation bonds were unchanged and revenue bonds declined 1/8 point.

Trading was light.

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