IBM stock sag pulls down Dow by 2.71 points

The Ticker

January 07, 1993|By Julius Westheimer

Dragged down by a further loss in IBM, which fell 87.5 cents to an 11-year low of $48 (the stock reached $139.75 in 1991), the Dow Jones industrial average slipped 2.71 points yesterday, closing at 3,305.16.

LOOKING INTO 1993: "Rising short-term interest rates will be the major surprise and major danger in 1993. With narrow money supply showing extremely rapid expansion at a 20 percent annual rate recently, it wouldn't take much of an uptick in economic activity to cause broad money supply expansion -- and that would cause interest rates to rise on inflationary fears." (LaLoggia's Special Report) . . "Historically, narrow-range, low volatility stock market years such as 1992 are followed by much wider-range, higher volatility years 90 percent of the time." (Robert Farrell, Merrill Lynch chief analyst) . . . "Common wisdom says that drug stocks will be big losers under Clinton; however, drugs are only 5 percent of national medical expenses, so these fears appear overblown." (The Value Forecaster)

DIGGING DEEPER: "Underwriting and issuing new shares is where Wall Street makes its living. It's easy now to get a new issue done, but when stock brokers start to have major problems with new merchandise, that will be a sign that the bull market has run its course." (Frederick Rowe Jr., hedge fund manager) . . . "Interest rates and optimism for stocks have both been rising, both setting off a few alarms in our sentiment indicator." (The Zweig Letter) . . . "Our fundamental indicators remain very bullish for U.S. bonds and suggest that long-term yields will challenge their low point reached earlier in 1992." (Bank Credit Analyst)

Of all the 1993 Wall Street forecasts we've read recently, about 60 percent were cautious, the balance modestly optimistic.

MARYLAND MEMOS: Tomorrow night, locally produced "Wall Street Week With Louis Rukeyser" will be host to ex-Salomon Bros. interest rate guru Dr. Henry Kaufman, with panelists Howard "Pete" Colhoun, Michael Holland and Carter Randall. The show is titled "What to Expect Economically from Clinton." . . . Reminder: Your federal and Maryland fourth-quarter estimated income tax payments must be postmarked by midnight Friday, Jan. 15. Use Voucher No. 4. . . . MNC Financial (Maryland National Bank) stock reached a yearly high earlier this week, touching $13 a share. When 1992 began, the shares traded around $4.50 . . . T. Rowe Price U. S. Treasury Intermediate Fund is listed under "Best Buys: Intermediate Bond Funds" in Forbes, Jan. 18.

BARGAIN CREDIT: "Credit card junkies who carry balances and have good credit histories may be deluged this month with low-rate offers. The Bank of Delaware (800-942-1977) now touts its no-fee, 11.9 percent Consumers Edge credit card. (The low rate is offset by lack of a grace period.) Issuers hope consumers will transfer balances to their cards; most make it easy to do by providing transfer checks, and the consumer just writes a check to the previous issuer to pay off the balance, transferring it to the lower-rate card. But examine the new card; sometimes the rate rises in six months or so." (U. S. News & World Report, Jan. 11)

JANUARY JOTTINGS: January is historically an "up" month in Wall Street, with the S&P Composite Index rising an average 1.5 percent over the past 42 years . . . Did you realize that the dividend yield on the Standard & Poor's 500-stock index has dropped below 3 percent for the first time since 1987, and the sixth time in the past 30 years? . . . Were you aware that short-sellers (sellers of borrowed stock in the hope of replacing the shares later at lower prices) suffered an unprofitable year in 1992? . . . Baltimore Security Analysts hold "Annual Investment Outlook Panel," Thursday, Jan. 14, at Stouffer's Hotel at noon. Speakers will be Pete Colhoun, Gordon Croft and Anthony Hitschler . . . Council of Economic Advisers Chairman Michael Boskin said recently, "The only function of economic forecasting is to make astrologers look good." . . . "The safest way of doubling your money is to fold it and put it back in your pocket." (Fixed Income Letter) . . . Blockbuster Entertainment, Ladd Furniture, Gulf States Utilities and Pet Inc. are listed under "Favored Low-Priced Stocks" in S&P Outlook, Jan. 6.

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