Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Wed, May 20 1992 Date: Wed, 20 May 92 05:20:57 EDT Message-ID: 05-20 0000 DECISIONLINE: Banking & Economy USA TODAY Update May 20, 1992 Source: USA TODAY:Gannett National Information Network HOUSING STARTS PLUNGE: The Commerce Department reported Tuesday that home construction starts fell 17% in April, while applications for building permits dropped 3.3%. The drop in starts was the biggest one-month slide in eight years. Seasonally adjusted starts fell to an annual rate of 1.1 million in April, down from 1.3 million in March. Starts fell across the USA, with the worst drop in the Midwest - down 31%. RATE CUT SEEN: Bad news about housing starts in April was good news for Wall Street Tuesday. Investors are hoping the 17% drop will prompt the Federal Reserve to ease the federal funds rate - what banks charge each other for overnight loans. Larry Wachtel, analyst at Prudential Securities, says it's not clear how much stocks would benefit from a rate cut because "everyone now expects it." DOW UP ON HOUSING NEWS: Stocks rose Tuesday as investors bet that the Federal Reserve soon will ease interest rates in the wake of a big drop in housing starts in April. The Dow Jones industrial average rose 21.96 points to a record 3397.99, edging its previous best, 3397.58, set May 11. Other indexes rose. Advancers beat decliners 1,010 to 698 on the New York Stock Exchange. ECONOMISTS NOT WORRIED BY REPORT: Though a report Tuesday that housing starts fell 17% in April is not seen as a good sign, many economists say it does not mean the recovery is stalled, just slow. "We're having a recovery, we're going to continue having a recovery, it's just not going to be supercharged," says Robert Brusca, chief economist at Nikko Securities International. FRANKLIN EXPECTS MORE GROWTH: The economy likely grew at a stronger rate last quarter than the 2% annual growth rate the government initially estimated, Commerce Secretary Barbara Franklin. She said Tuesday that Commerce economists and White House Chief Economist Michael Boskin told her an upward revision is likely when the figures come out May 29. GM TO SELL SHARES AT $39: General Motors will sell 55 million additional shares of its stock to the public at $39 a share, Reuters reports. Cash from the $2.2 billion offering - the biggest common-stock offering ever by a U.S. coproration - will be used to complete the company's restructuring and to shore up its North American operations. GM stock closed at $39 1:4 Tuesday, down 1:8. COMMERCE FINDS `DUMPING': The Commerce Department ruled Tuesday that minivans made by Toyota and Mazda are being sold at prices that are too low or "dumped," in the USA. The ruling said that - compared to similar models sold in Japan - Toyota has been unfairly pricing Previas 6.8% too low and Mazda has been pricing its MPV 12.7% too low. The case now goes to the International Trade Commission. OIL PRICES DOWN TUESDAY: Oil prices dropped Tuesday when traders sold to lock in profits, Iraq tried to resume its role as an OPEC exporter, and anxiety rose over a possible supply increase. On the New York Mercantile Exchange, the price of benchmark light sweet crude for June delivery fell 40 cents a barrel to $20.12. The July contract fell 36 cents a barrel to $20.35. GOLD, SILVER PRICES MIXED: Gold and silver prices were mixed Tuesday. On the New York Commodity Exchange, gold bullion for current delivery settled at $337.80, off $1.10. In Zurich, the metal rose to $339.50 from $338.80. In Hong Kong, gold rose $1.24 to $339.89. On the Comex, silver bullion for current delivery settled at $4.079, down from $4.087. In London, the metal was unchanged at $4.09. NEWSLETTER STUDIES FUNDS: Newsletter Growth Fund Guide has compared New York Stock Exchange stocks and stock mutual funds in years the market rose or fell by 10% or more. It found that in years the market rose sharply, a large percentage of stocks fell while only a few funds fell. It also found that a greater percentage of funds went down in value during bear markets than individual NYSE stocks. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Wednesday at 3397.99, after closing up 21.96 Tuesday. The New York Stock Exchange composite opens at 229.32, up 1.73. The American Stock Exchange market value opens at 392.37, up 0.85. The NASDAQ OTC composite opens at 578.05, up 1.52. DOLLAR OPENS MIXED OVERSEAS: The dollar opens mixed on foreign markets Wednesday. It opens at 0.5439 British pounds, down from 0.5451; 5.3460 French francs, down from 5.3575; 129.05 Japanese yen, up from 128.75; and 1.5911 German marks, down from 1.5958. (As of 3 p.m. Monday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: Jason P. Smith. (919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM