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Battered Steel Group Leads Dow Retreat of 2.24 Points

July 28, 1993|From Times Staff and Wire Reports

Market Overview

* Blue-chip stocks ended lower Tuesday as a battering in the steel group wiped out gains set when Big Blue rallied, despite reporting a huge loss for the second quarter.

* Treasury yields ended higher after swallowing $16 billion in new two-year notes, an auction that analysts said drew lukewarm investor response.

* A rebound in oil futures prices gathered speed as more traders latched on to the rallying market.

Stocks

The market seesawed throughout the morning, only embarking firmly on its downward course once shares of steel producers headed lower.

That followed the International Trade Commission rulings on steel dumping charges against several countries. The commission wouldn't back charges that U.S. steel producers have been injured by dumping from some foreign producers.

The Dow Jones industrial average fell 2.24 points to 3,565.46 on Big Board volume of 258.75 million shares, down from Monday's 224.18 million. Declining issues outnumbered advances by about 11 to 9 on the New York Stock Exchange.

International Business Machines Corp. gave the market a surprise boost in early dealings after posting an $8-billion loss in the second quarter, which was less than the market's worst expectations. IBM, the most-active issue on the NYSE, jumped 3 1/4 to 45 5/8.

IBM's travails sparked selling among many technology stocks, analysts said. Microsoft, which trades on the NASDAQ market, fell 2 3/4 to 75 1/2.

Bethlehem Steel, a Dow component, shed 3 7/8 to 14 7/8.

Elsewhere in the group, USX-U.S. Steel lost 4 3/4 to 31 7/8, National Steel Corp lost 5 1/2 to 14 7/8, Nucor slipped 4 1/4 to 81 1/4, Inland Steel fell 3 1/4 to 26 3/8, Wheeling-Pittsburgh lost 2 to 12 1/8, Weirton Steel eased 1/4 to 8 1/8 and Geneva Steel shed 1 7/8 to 11 7/8.

For the second day, Novell led the NASDAQ most-active list, falling 2 7/8 to 18 3/8. Late Monday, the company reported lower-than-expected second-quarter earnings, citing weak European sales.

Stocks were mixed abroad. The London Stock Exchange was buoyed initially by Monday's record closing high on Wall Street. The Financial Times 100-share average ended 35.2 points up, at 2,879.4. Tokyo's 225-share Nikkei average was up 69.31 points to 19,891.39. Frankfurt's DAX average lost 9.29 points, to close at 1,845.23.

Credit

The auction results were viewed as reasonably favorable, considering the bearish tone that has spread through the market as a result of comments by Federal Reserve Chairman Alan Greenspan last week.

The yield on the Treasury's main 30-year bond rose to 6.68% from 6.67% late Monday, pushing down its price by 3/32 point, or 94 cents per $1,000 in face value.

Breaking a monthlong drought of new intermediate and long-term issues, the government's sale of two-year notes was the first in a wave of supply scheduled to hit the market over the next few weeks.

The Treasury sold the notes at a high yield of 4.26%, the highest rate since two-year notes sold for 4.28% on Jan. 26. Many market participants had expected the notes to yield 4.25%, and the higher rate reflected the ability of investors to be somewhat choosier about the returns they will accept.

The federal funds rate, the interest on overnight loans between banks, was 2.938%, down from 3.063% late Monday.

Other Markets

In commodities trading, crude futures have been mainly on the upswing since July 19, when the spot delivery price touched a three-year low of $16.75 a barrel.

On the New York Mercantile Exchange, light sweet crude oil for September delivery rose 35 cents, to $18.42 a barrel.

Elsewhere, gold for current delivery closed at $391.20 an ounce, down $1.80 on the Commodity Exchange in New York. Silver for current delivery fell to $5.067 an ounce, from $5.082 a day earlier.

In currency trading, the dollar crept higher against most European currencies but slipped against the Japanese yen in quiet trading as investors waited to see whether German interest rates would drop.

The dollar closed at 106.10 Japanese yen in New York, down from 106.65 a day earlier. The greenback rose to 1.728 German marks, up from 1.725 marks. The British pound fell to $1.489 from $1.502.

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