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Dow Gains 4.15; Stocks Brake Downhill Slide : Market's 9-Day Losing Streak Ends as Traders Jump Back In, Searching for Bargain Issues

September 10, 1987|From Times Wire Services

NEW YORK — The stock market struggled to a small gain Wednesday, at least temporarily braking its late-summer slide.

The Dow Jones index of 30 industrials, which had fallen 177.30 points over the nine previous sessions, rose 4.15 to 2,549.27.

Volume on the New York Stock Exchange came to 164.91 million shares, down from 242.80 million in the previous session.

Stocks began to attract support from buyers late in Tuesday's session after the Dow index briefly dropped below 2,500.

Analysts said that the Dow's decline raised hopes that the market was close to completing a "correction," or temporary pullback, from the record highs it reached last month.

But the bulls got sparse help Wednesday from the bond market, where interest rates fell early in the day but improved later in the session as the dollar steadied in foreign exchange markets and traders sought bargains among issues depressed by the market's recent decline.

The Treasury's key 30-year bond, which lost more than 1 1/2 points on Tuesday, rose 7/32 point, or just over $2 for every $1,000 in face amount.

Wall Streeters were looking ahead uneasily to Friday's scheduled report on the nation's trade balance for July. A bigger than expected trade deficit for June caught many investors off guard a few weeks ago.

The Merrill Lynch Market Letter estimates that the figures will show imports exceeding exports in July by about $15 billion, compared to a $15.7-billion June deficit.

Among actively traded blue chips on Wednesday, General Electric rose 1/2 to 60, American Telephone & Telegraph added to 32, International Business Machines dropped 1/2 to 157 and Eastman Kodak fell 1/2 to 98 3/8.

Ames Department Stores led the NYSE active list, down 3 3/8 at 18 1/2 on turnover of more than 3.8 million shares. Late Tuesday, the company reported sharply lower quarterly earnings.

Tokheim, which said sales of a new line of fuel dispensers were running below expectations, fell 3 1/8 to 27.

Pannill Knitting jumped 3 to 16 1/8. The company said it retained an investment banking firm to study the possibility of its being sold.

Metals stocks were a notable strong spot. Reynolds Metals climbed 3 5/8 to 49 3/4, Phelps Dodge gained 2 to 48, Asarco rose 1 1/8 to 30 3/4, Alcoa was up 7/8 at 58 and Alcan Aluminium increased 3/4 to 32.

Bolar Pharmaceutical, traded on the American Stock Exchange, rose 2 5/8 to 51. The company said it expects its earnings this year to be increased by $1 a share from sales of its new generic version of a SmithKline anti-hypertensive drug.

Advancing issues slightly outnumbered declines on the NYSE. The exchange's composite index of all its listed common stocks edged up 0.20 to 175.79.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 192.47 million shares.

Standard & Poor's index of 400 industrials rose 0.42 to 366.72, and S&P's 500-stock composite index was up 0.36 at 313.92. The Wilshire index closed at 3,096.558, up 3.545.

In the bond market, traders appeared unimpressed by the gains.

"It's a drop in the bucket compared to the devastation we've seen," said Elliott Platt, an economist for Donaldson Lufkin & Jenrette.

"The market is really a captive of the data that will come out on Friday," Platt added.

In addition to the report on the merchandise trade deficit in July that is due Friday, the government is scheduled to release its producer price index for August. Together, the reports should give traders more clues about the future course of inflation and interest rates.

In the secondary market for Treasury bonds, prices of short-term governments were up 1/32 point to unchanged, intermediate maturities rose 5/32 point to point and 20-year issues were up 1/16 point, according to the financial reporting firm Telerate Inc.

In corporate trading, industrials and utilities were up 1/8 point in moderate activity, according to the investment firm Salomon Bros.

Among tax-exempt municipal bonds, general obligations were unchanged, while revenue bonds rose point in moderate trading, Salomon Bros. said.

Yields on three-month Treasury bills fell 5 basis points to 6.38%. Six-month bills were down 4 basis points at 6.66%, while one-year bills were down 7 basis points to 7.16%.

A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, traded at 7.75%, up from 7.25% on Tuesday.

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