Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Tue, May 5 1992 Date: Tue, 5 May 92 05:31:47 EDT Message-ID: 05-05 0000 DECISIONLINE: Banking & Economy USA TODAY Update May 5, 1992 Source: USA TODAY:Gannett National Information Network FED CONSIDERS SWITCH: The Federal Reserve is considering moving back towards a policy that would focus more on steady money-supply growth than on keeping interest rates in check. There are no signs that such a policy change is imminent, but Fed vice chairman David Mullins discussed the possible switch in an interview with Reuters. Economists say if the move was made, short-term rates would drop immediately. MONEY WOULD BE PUMPED TO BANKS: If the Federal Reserve made a move to a system that stressed money-supply growth, as it is contemplating, it would pump enough cash into banks' reserves to keep the amount of money in circulation growing. It wouldn't worry if short-term interest rates bounced around in a narrow range, as it does now. It would be a move back to the policies of the early 1980's. DOW SURGES MONDAY: With concerns over further rioting in Los Angeles and other areas reduced, stocks moved higher Monday. The Dow Jones industrial average jumped 42.04 points to 3378.13, breaking a record set April 16. Broader indexes also gained. Advancers led decliners by a 2-to-1 margin, 1,163 to 585, on the New York Stock Exchange, where volume was light at 175 million shares. (For more, see special Dow package below.) OPTIMISM FOR BANKING INDUSTRY: Though some problems such as the slump in commercial real estate will take a long time to work out, James Schmidt, manager of the $62 million Freedom Regional Bank fund, is optimistic about the recovery of the banking industry. He sees a recovery for several reasons, including a rebound in the economy, lower interest rates and reduced pressure by regulators. DISCOUNT RATE LOWER: The Treasury Department sold $11.4 billion in three-month bills at an average discount rate of 3.65%, down from 3.71% last week. It also sold $11.5 billion in six-month bills at an average discount rate of 3.78% vs. 3.85% last week. Also, the Treasury kicks off its quarterly auction Tuesday with the sale of $15 billion in three-year notes. The auction runs through Thursday. OIL PRICES REACH 1992 HIGH: Oil prices soared Monday to new highs for the year. Light sweet crude oil for delivery in June settled at $21.12 per barrel, up 27 cents on the New York Mercantile Exchange. Oil for next-month delivery had not closed that high since Nov. 29, when the final price was $21.48 a barrel. Lower-grade sour crude oil for delivery in June settled at $18.47 per barrel, up 27 cents. GOLD PRICES DOWN, SILVER UP: Gold prices fell and silver prices were up Monday. On the New York Commodity Exchange, gold bullion for current delivery settled at $337.30 a troy ounce, off $1.70 from Friday. Republic National Bank said gold fell $1.45 an ounce to a late bid price of $336.80. On New York's Comex, silver bullion for current delivery settled at $4.002 a troy ounce, up from $3.997 on Friday. SPECIAL PACKAGE ON DOW: BLUE CHIPS PULL UP SMALL STOCKS: The NASDAQ composite index of over-the-counter stocks climbed almost 1% Monday. Analysts said blue chips had risen high enough that they pulled up other stocks. "It's prices chasing prices," says Robert Padala, trading manager at Donaldson, Lufkin & Jenrette. Also helping stocks Monday were analysts' positive comments about two blue-chip stocks IBM and Merck. RELIEF FELT OVER CALM: Relief over calm in Los Angeles was felt by the stock market Monday. "Last Friday, the market sold off on nervousness that all of urban America was going to go up in flames over the weekend," says Jim Solloway, director of research at Argus Research. "But that didn't happen, and that probably encouraged some buying" Monday. BIG JUMP NOT SEEN: A decision to start buying drug and biotechnology stocks helped push the Dow to a new record close Monday. Those stocks had been sinking since January. But few analysts see a big jump for stocks soon. "The market is still not clicking on all cylinders," says Gregory Nie, analyst at Kemper Securities. "It's time to be very selective," says Bradley Turner, of McDonald & Co. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Tuesday at 3378.13, after closing up 42.04 Monday. The New York Stock Exchange composite opens at 229.42, up 2.22. The American Stock Exchange market value opens at 391.61, up 1.83. The NASDAQ OTC composite opens at 583.54, up 5.40. DOLLAR OPENS UP: The dollar opens up on foreign markets Tuesday. It opens at 0.5626 British pounds, up from 0.5598; 5.5535 French francs, up from 5.5300; 133.15 Japanese yen, up from 132.65; and 1.6480 German marks, up from 1.6390. (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