Dow slips on rising interest rates


August 23, 1994|By JULIUS WESTHEIMER

Interest rates climbed sharply yesterday and the lackluster stock market sagged. As the 30-year government bond yield rose to 7.55 percent, the Dow Jones industrial average slipped 3.89 points, to close at 3,751.22. When interest rates rise, investors tend to shun stocks and buy higher-yielding CDs, T-bills and bonds instead.

Speaking of Wall Street, we present today a string of brief stock, bond, mutual fund, business and other money-related items, many of which piled up while I vacationed:

McCormick & Co. is listed under "Dividends Paid for 50 Years or More and Increased in Each of the Last 5 Years" in "S&P Outlook," Aug. 17.

"We continue to rate Black & Decker as a Buy-1, with a 12-18 month target of $26 per share." ("Legg Mason's Research Weekly")

Today and tomorrow, the Treasury issues new two- and five-year notes. (Notes are the same as bonds except notes have shorter maturities.) Call the Baltimore Federal Reserve branch (410-576-3553) for details.

"The average major-league baseball player's pay comes to a million, two hundred thousand dollars a year." (Roger Angell in the New Yorker, Aug. 15)

In contrast to the above, the U.S. Census Bureau just reported that 36.8 million Americans now live below the poverty level -- annual income of $7,357 for an individual, $14,764 for a family of four.

"If you want to check on a broker's honesty, call the National Association of Securities Dealers' hot line at (800) 289-9999 and ask if there have been any judgments against the broker. You'll get a printout of his/her record." (Money, August)

"Signet Banking Corp. aims to exit the credit-card business by year-end, leaving behind fierce competition and jumpy customers." (From a full-page article, "Credit-Card Blues," in Barron's, Aug. 22, on newsstands this week.)

Selected summer reading: "What Every Woman Needs To Know Before (And After) She Gets Involved With Money," by Lois Forer . . . "One Up On Wall Street," by Peter Lynch . . . "The Intelligent Investor," by Benjamin Graham . . . "The Great Crash: 1929," by John Kenneth Galbraith.

Seen in Canada: A professionally lettered identification sign, "WRONG BUS," on the front of a tourist van. Its driver told me, "This is better than numbers they forget; now they know which bus to get back on."

Autumn meetings of Baltimore Security Analysts Society will focus on COMSAT, First Fidelity, Wilmington Trust, BGE and "Benjamin Graham on Value Investing." Details as we get closer.

Bethlehem Steel appears under "Negative Earnings Surprises" in Business Week, Aug. 15. Second-quarter earnings of 14 cents a share disappointed analysts who expected 30 cents of expected profits. The stock eased about 10 percent since the report.

"Municipal Bond Strategies: The Cost of Waiting vs. the Reward of Investing," with charts and graphs, is yours free by phoning PaineWebber's Marvin Fribush at (410) 576-3220.

"The dollar is not in bad shape, and investors should not view its decline against the yen as a signal to bail out of the stock market." (Irwin Kellner, chief economist, Chemical Bank)

In a new personalized, computer-driven gimmick, Money magazine, Sept. (p. 39) reads, "Dear Julius Westheimer, here are the leading borrowing deals in Baltimore: 30-year mortgage: Crestar Bank 8.25 percent; 1-Yr ARM: Heritage Savings 4.50 percent; Home equity: Loyola FSLA 4.95 percent; Car loan: Fairfax Savings 8.75 percent."

"A new survey by Novotel New York, a mid-Manhattan hotel, finds that business travelers are a sedentary lot. Some 55 percent explore the mini-bar, while 40 percent just 'veg out' and watch TV. About 57 percent call home every day." (Fortune, Sept. 5)

"Mutual fund automatic withdrawal plans let you receive monthly payments. Most funds offer such plans, although they are not widely publicized." ("The No-Load Fund Investor" by Sheldon Jacobs)

"In calculating the daily changes in its industrial average, Dow Jones adds up the price changes in the 30 underlying stocks and divides the total by its famous divisor, which these days is 0.38610730. The divisor changes any time a stock splits." (Fortune, Sept. 5)

"Things are looking up for yield-hungry investors. After a five-year relentless slide, short-term rates are rising steadily. People who watched nervously while short-term CDs dwindled to less than 3 percent can now get around 5 percent if they seek out top rates." (Wall Street Journal)

"Everybody should buy bonds now, especially five-to-10 year issues, where you get the highest yields." (Theresa Havell, manager of $1.5 billion in bonds for Neuberger & Berman Bond Funds)

"The sooner a business owner masters balancing her personal finances with the needs of her enterprise, the better." (Working Woman, September)

"Two-thirds of all home loans are 30-year, fixed-rate mortgages." (ABC-TV)

"Business is a lot like tennis; those who don't serve well end up losing." (Bits & Pieces)

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