Stock prices closed mixed Tuesday as investors watched continued declines in the dollar and consumer confidence. Bond prices slumped again after a weak auction for two-year Treasury notes.
The Dow Jones industrial average gained 4.05 points to 3232.22 after being off most of the day on the New York Stock Exchange. Losing issues outnumbered winners by 10-7 among stocks listed on the New York exchange. Big Board volume was an active 201.6 million shares.
In trading early Tuesday, the dollar dropped to a record-low 1.3945 German marks. But the U.S. currency recovered in New York, where it was quoted at 1.4014 marks, down from 1.4030 late Monday. Financial markets have been spooked since Friday by the falling dollar, which raises fears of inflation and higher interest rates and, generally speaking, indicates worldwide disgruntlement with U.S. economic conditions.
Bids in the Treasury`s auction of $15 billion in two-year notes were less than ambitious. The average yield backed up to 4.30 percent from 4.29 percent July 28. Afterward, bond prices slumped, with the 30-year Treasury bond closing down $3.13 per $1,000 in face amount to yield 7.47 percent, up from 7.44 percent late Monday. Next up is an auction of five-year notes Wednesday. Among active issues, International Business Machines bolstered the Dow average by rising $1.87, to $87. Strength throughout the technology stocks wasn`t enough to keep the Nasdaq index from losing 1.17 points to 554.22.
An ill wind
Commodity futures prices, including gold, generally fell Tuesday. An exception was the two-by-four lumber contract for September delivery at the Chicago Mercantile Exchange, thanks in part to Hurricane Andrew. Tuesday`s price climbed to $229.30 per 1,000 board feet from $225.60 Monday and $222.00 Friday.
Merc floor trader James Connelly acknowledged that the hurricane breathed some life into the lumber pit. But he expects the huge storm to have little lasting impact on prices, given the sluggish housing market nationally. The more immediate action has been in cash prices for plywood in the South, he said. There is no futures contract in plywood.
Dennis Downer, a Boise, Idaho-based wholesale lumber distributor and president of the North American Wholesale Lumber Association, agreed that new- home buyers outside the hurricane area are unlikely to face higher prices this fall and winter. But he`s not surprised that plywood and board-lumber mills that ship to Florida and Mississippi are boosting prices in the short run because of the hurricane.
”This will cause a little blurp in the market, but there is plenty of inventory,” he said.
Local news
Amid the market malaise, Joslyn, a Chicago-based supplier to electrical-utility and telecommunications markets, hit a 365-day high of $36.75 on thin trading. The stock has climbed fairly steadily since late May. Second-quarter profits were up 17 percent on a 2 percent gain in sales.
Chicago-based Methode Electronics climbed 62 cents, to $13.25, on an upbeat earnings report for its first fiscal quarter. Advance Ross, a maker of pollution-control devices, rose 75 cents, to $10.87, after announcing plans to acquire a European business that offers duty-free products to travelers and administers refunds of European value-added taxes to tourists.
Nasdaq short record
Like the Big Board, the Nasdaq market saw record short interest as of mid-August. Nasdaq short interest, which represents borrowed stocks sold in expectation of a price decline, rose 8.25 million shares, or 2 percent, from mid-July, to 423.6 million shares. It was the fifth consecutive monthly increase.
In the latest month, the five largest short positions among over-the-counter stocks were in Midlantic Corp., Adobe Systems, Cisco Systems, Tele-Communications and Centocor, Bloomberg Business News reported.
