Wall St still coffifosed by signals

Press, 1 February 1988, Page 27

Wall St still coffifosed by signals

By

JOHN GIVEN

NZPA-AP New York Like a leaf floating down a river, the stock market these days moves as if it knows where it’s going, riding every swirling current — until some branch or rock stops it cold.

Still quivering three months after Black Monday, Wall Street remains confused by conflicting signals about the direction of the economy and uncertain whether the next big turn for stocks is up or down.

Lately, it has been hooking a ride on every passing fancy — from takeover stocks, to divi-dend-related issues, to the latest prediction on interest rates.

Last week, stocks showed some tantalising bursts of enthusiasm in response to a rally in the bond market. But just when things were starting to look interesting, the excitement faded — muffled by a squall of computerised program selling or by mere indifference, analysts said. On Friday the Dow Jones average of 30 industrials rose 28.18 points to 1958.22, marking a 54.71point gain for the week.

The New York Stock Exchange composite index rose 1.91 to 144.13, a 5.44-point gain over the week; the American Stock Exchange market value index rose 1.97 to 269.10, a 3.48-point weekly gain, and the NASDAQ composite index for the over-the-counter market stood at 344.66, up 2.30 from Thursday and 7.07 for the week.

Volume on the Big Board averaged 193.66 million shares a day over the week, against 155.09 million the week before.

“What’s holding the market together is the hope that we’ve seen the worst since the big decline of October,” said Frank Cappiello, head of the McCullough, Andrews and Cappiello Inc. Securities firm in Baltimore. “But there’s a lot of fear out there,” he added.

But there’s hope, too. The previous week’s report that the nation’s gross national product rose 4.2 per cent in the fourth quarter sent bond prices soaring and interest rates to their lowest levels in months.

The reason: a surge in inventories that was mainly responsible for the GNP gain. The bulge gave bond-market bulls cause to believe the Federal

Reserve would let interest rates continue to fall. Stock-market bulls also relished the prospect of lower rates, since this would help businesses grow, creating greater potential for higher earnings, many analysts said.

A few big takeover offers — such as Campeau Corp’s SUS 4.2 billion ($NZ6.34 billion) bid for Federated Department Stores Inc. and Black and Decker Corp’s SUSI.B billion (SNZ2.7I billion) offer for American Standard Inc. — also stirred the marketplace. Such activity “does add to a positive belief that there is undervaluation of some issues in the market,” said Gene Jay Seagle, an analyst at the Gruntal and Co. securities firm.

“It takes a dull market and starts to fire it up.”

Aggravating the market’s uncertain tendencies is the notable absence of some big blocks of players. Foreign traders, for example, have been staying out in droves, waiting for the dollar to stabilise. Pension funds have been coming back, but to a lesser extent than last year.

And then there are the small investors, who, more than anyone else, remain terrified by the awesome impact of the crash.

Closing prices of selected Wall St stocks on Friday (points equal SUSI) were.— Alcan 25%, Alcoa 41, Amerada 26%, AmExp 26%, Armco 9%, Asarco 22%, RCO 74%, ATT 29%, BethStl 16%, Boeing 45%, Borden 52%, CBS 157%, Chevron 44%, Chrysler 26%, Citicorp 21%,, ClarkEqp 24%, Coca Cola 37%, Colgate 42%, ContlData 22%, Crane 22%, Digital 1233%, Dow Chem 79, DuPont 82%, East Kodak 43%, Englhrd 203%, Exxon 42, Firestone 31, Fluor 13%, Ford 42%, FrptMcmor 24%, Gencorp 20%, GenDyn 52%, GEC 45%, GM 65%, Goodyear 58%, Greyhound 273%, Grumman 18%, Gulfßes 11%, Heinz 40%, Haliburton 28%, Homestake 14, Honeywell 61%, IBM 112%, INCO 18%, ITT 47, JandJ 78%, KMart 32, Kaisertech 10%, Kraft 55, Lockheed 38%, MMM 60%, Manville .2%, Mattel 7%, McdonDoug 63%, Mcdonald’s 45%, MerrLynch 24, Mobil 44%, Monsanto 87%, Navistar 4, NCR 57%, NewmMin 32%, Occidental 26%, Pfizer 54%, PhelDodge 36%, PhilipsPet 14%, Polaroid 26%, Raytheon 67%, ReynMetal 38%, RoylDutch 114%, Schlumberger 32%, Seagrams 55%. SearsRoe 34%, ShellTr 75%, Texaco. 37%, Texaslnst 473%, UNOCAL 29%, UnionCarb 20%, Unisys 33%, USX 30%, Disney 58 %, Westinghouse 50%, Woolworth 41%, Xerox 54%.