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Erratic Market Closes With a Loss : Conflicting Motives Sway Calendar-Watching Traders

March 12, 1987|From Times Wire Services

NEW YORK — The stock market posted a moderate loss Wednesday, weakening near the close of an erratic session.

The Dow Jones average of 30 industrials, up about 14 points in the early going, finished with an 11.11 loss at 2,268.98. The average had climbed 19.97 points on Tuesday.

Volume on the New York Stock Exchange reached 186.88 million shares, up from 174.76 million in the previous session.

The market opened to a round of buying. But analysts said stocks were caught in the midst of conflicting forces dictated by the calendar.

On one hand, they said, money managers at investing institutions were eager to be heavily invested in the market by the end of March, so as not to show any large cash positions in their quarterly reports to clients in the midst of a vigorous bull market.

On the negative side, however, many Wall Streeters are worried about possible periods of volatility with a "triple witching hour" approaching on March 20.

Blue Chip Losers

That date marks the last trading in a set of options and futures on stock indexes, which are used by professional traders in computer-program strategies.

Inco shares dropped 3/4 to 14 3/4.

Other losers among the blue chips included International Business Machines, down 1 1/8 at 141 3/4; American Express, down 3/4 at 78; International Paper, down 1 at 98 1/8, and Eastman Kodak, down 7/8 at 75 5/8.

Home Shopping, which reported lower-than-expected earnings late Tuesday, fell 5 5/8 to 23 7/8.

Reebok International gained 3/4 to 42 1/2 in active trading. On Tuesday the company agreed to buy Avia Group International, another maker of athletic shoes.

Home Shopping Network, traded on the American Stock Exchange, tumbled 5 5/8 to 23 7/8 on volume of more than 3.2 million shares.

On Tuesday the company reported earnings for the quarter ended Feb. 28 of 10 cents a share, against 6 cents in the comparable period a year earlier. Analysts said some investors had been expecting more from the company, which has been a market standout since its public debut last spring.

Declining issues slightly outnumbered advances in the overall tally on the NYSE, with 736 up, 780 down and 444 unchanged. The exchange's composite index of all its listed common stocks slipped 0.18 to 165.39.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,689, compared to 3,551.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 222.41 million shares.

Standard & Poor's index of 400 industrials lost 0.23 to 331.81, and S&P's 500-stock composite index was down 0.55 at 290.31.

The Wilshire index of 5,000 equities closed at 2,924.386, down 1.343 or 0.05% from the preceding trading day.

The NASDAQ composite index for the over-the-counter market rose 2.07 to a new high of 431.46. At Amex, the market-value index closed at 328.87, down 0.63.

The bond market ended a lethargic session mostly unchanged. Traders attributed the performance to a dearth of economic news and consequent investor unwillingness to participate in the market.

The Treasury Department's key 30-year bond rose about 1/16 point or 62 cents for each $1,000 in face amount, and its yield eased to 7.52% from 7.53% late Tuesday. Corporate and municipal bonds prices were steady to marginally lower.

Traders said many investors were awaiting the government's release of February retail sales figures Thursday, as well as February industrial production and producer price figures Friday.

Those statistics could provide a clearer picture of the economy's direction and indicate whether the Federal Reserve Board intends to tighten or ease interest rates, which move inversely to bond prices.

"I think the Fed is going to walk a fairly narrow line," said Steven J. Hueglin, executive vice president of the New York investment firm of Gabriele, Hueglin & Cashman. "They don't have too many possibilities available."

Analysts said conflicting trends are keeping the Fed from changing credit policy. On one hand, the cheaper dollar and higher oil prices could stimulate inflation, raising pressure on the Fed to tighten credit. On the other hand, economic sluggishness compels the central bank to keep interest rates down.

In the secondary market for Treasury bonds, prices of short-term and intermediate governments were mostly unchanged, and long-term issues rose about 1/16 point, according to the investment firm of Salomon Bros.

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

T-Bill Yields Rise

In corporate trading, industrials and utilities were unchanged in quiet dealings. Among tax-exempt municipal bonds, general obligations and dollar bonds were down about point in light to moderate activity.

Yields on three-month Treasury bills were up 2 basis points to 5.68%. A basis point is one-hundredth of a percentage point. Six-month bills remained steady at 5.62% and one-year bills were up 1 basis point at 5.73%.

The federal funds rate, the interest on overnight loans between banks, traded at 6.125%, down from 6.188% Tuesday.

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