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, Jul 8 1992 Date: Wed, 8 Jul 92 05:13:09 EDT Message-ID: 07-08 0000 DECISIONLINE: Banking & Economy USA TODAY Update July 8, 1992 Source: USA TODAY:Gannett National Information Network DOW DROPS SHARPLY: Stocks tumbled Tuesday, led lower by falling retailer and heavy industry stocks. The Dow Jones average of 30 industrials, initially up about 10 points in early trading, fell 44.03 to 3295.17 - its biggest one-day decline since April 7. Broader indexes were also down. Losers outnumbered winners 1,059 to 720 on the New York Stock Exchange, where volume was heavy at 226 million shares. (For more, see special Market package below.) RALLY MAY PRECEDE ELECTION: The stock market still should have life in it, some analysts say. "Historically, we should have a good July and August," says Robert Stovall, president of Stovall:Twenty-First Advisers. His evidence: A summer rally has preceded 15 of the last 16 presidential elections. The exception was 1960, when the Federal Reserve imposed a tight money policy and interest rates rose. SAFEWAY'S EARNINGS DROP: Safeway Inc., citing a listless economy and low food prices, said its second-quarter earnings fell 6% to $33.3 million from $35.6 million a year ago. Per-share income fell to 28 cents from 31 cents. For the first six months of 1992, Safeway earned $56.2 million, down nearly 10% from $62.3 million in the first half of 1991. Per-share income fell almost 18%, to 47 cents from 57 cents. MOBIL TALLIES CUTS: Mobil says it has cut a total of 2,000 white-collar jobs this year as it restructures domestic operations. But the company points out that most of the 2,000 jobs, mostly in U.S. oil and gas exploration and refining, have been cut by attrition. Mobil, the second-largest U.S.-based oil company after Exxon, employs 67,500 worldwide, with nearly 39,000 workers in the United States. MERIDIAN TO BE ON TV ANSWER: Meridian Bancorp said Tuesday it is the first bank to sign a contract with TV Answer to provide home banking via television. TV Answer, based in Reston, Va., is a wireless, interactive TV service that lets consumers play along with game shows, respond to news polls, shop and order food through their TV. It is scheduled to be available by mid-1993. Meridian plans to offer the service by 1994. GOLD, SILVER DECLINE: Gold and silver prices declined Tuesday. On the Commodity Exchange, gold bullion for current delivery settled at $346.20 a troy ounce, off 30 cents. Republic National Bank said gold slipped 20 cents to $346.20. On the Comex, silver bullion for current delivery ended at $3.873, down from $4.028. PRICES DROP ON DEMAND FEARS: Oil prices fell sharply Tuesday, hurt by traders who sold on fears that demand is weakening due to global economic problems. On the New York Mercantile Exchange, the price of benchmark light sweet crude for August delivery dropped 49 cents a barrel to settle at $21.40. An International Energy Agency report revised downward the industrialized world's appetite for fuel in the second quarter. SPECIAL PACKAGE ON MARKET: EARNINGS NEWS SPARKS SELLING: Warnings from companies about disappointing earnings drove Tuesday's selling on the stock market. Paper maker Georgia-Pacific said it would eek out only a slight profit, surprising analysts who were expecting strong earnings for the quarter ended June 30. A host of other companies have issued similar warnings recently. That is forcing Wall Street analysts to revise their estimates. ESTIMATES BEING LOWERED: "Estimates have been coming down the last few weeks," says Benjamin Zacks, of Zacks Investment Research. In the last 30 days, 66% of all revisions have been down. Still, companies represented in the Standard & Poor's 500 index will earn an average $5.75 per share for the second quarter, up 18% from a year ago. But that's lower than analysts were predicting just a few weeks ago. ECONOMY ALSO HAS EFFECT: Tuesday's market plunge also reflects worries about the economy. Last week's news that unemployment in June surged to 7.8% has renewed fears that the economic recovery is sputtering. Earlier this year, investors had been betting that the recovery was real and that earnings would soar. Now, Smith Barney analyst John Manley says, "People may be tired of waiting." INVESTORS TURNING TO T-NOTES: Investors trying to protect their investment money are turning to intermediate-term Treasury notes. Raymond DeVoe, of Legg Mason Wood Walker, says more people are showing interest in 5-year Treasury notes, which carried a 5.88% yield as of Tuesday and may offer less volatility than stocks. "It makes sense if they've been burned by stocks this year," he says. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Wednesday at 3295.17 after closing down 44.03 Tuesday. The New York Stock Exchange composite opens at 225.15, down 2.29. The American Stock Exchange market value opens at 380.26, down 2.32. The NASDAQ OTC composite opens at 557.41, down 5.76. DOLLAR OPENS MIXED OVERSEAS: The dollar opens mixed on Wednesday. It opens at 0.5190 British pounds, down from 0.5232; 5.0320 French francs, down from 5.0915; 1.4947 German marks, down from 1.5118; and 124.30 Japanese yen, up from 124.25. (As of 3 p.m. Tuesday. 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: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. 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