Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Wed, Feb 19 1992 Date: Wed, 19 Feb 92 06:39:08 EST Message-ID: DECISIONLINE: Personal Investing USA TODAY Update Feb. 19, 1992 Source: USA TODAY:Gannett National Information Network FED MOVE ROILS MARKETS: A Federal Reserve move intended to free up more money for banks to lend or invest roiled financial markets Tuesday. The Fed lowered from 12% to 10% the amount of deposits banks must keep in reserve to cover withdrawals. The news prompted a sell-off, driving yields on 30-year Treasury bonds higher, to 7.98% Tuesday from 7.91% Friday. The Dow Jones industrials fell 21.24 points to 3224.73. INFLATION FEAR SPOOKS INVESTORS: Bond prices fell Tuesday because investors fear the Fed action could overheat the economy and ignite inflation. Inflation erodes the fixed return that bonds provide. The bond market was already worried that Congress might do too much to stimulate the economy. Wednesday, Fed Chairman Alan Greenspan goes before the House Banking Committee to give his semiannual report on the economy. PRIMARY RESULTS MAY HURT MARKET: An already weakening stock rally may be capped as a result of President Bush's poor showing in Tuesday's New Hampshire primary. Stephen Leeb, editor of investment newsletters, said that Bush may now pass some kind of tax cut to boost his popularity, a move that could lift inflation and push up interest rates. He figures that could help cut more than 10% off the Dow in six months. (For more, see special Primary package below.) MARVEL SHARES PLUNGE: All of Marvel Entertainment Group's superheroes couldn't save it from investors who beat up the corporate father of The Hulk and Spiderman Tuesday. The company's stock plunged 11 to $54 5:8 on a report by Douglas Kass, the director of stock research at brokerage First Albany Corp., in this week's Barron's that said Marvel stock was "overinflated and due for a fall." WALT DISNEY TO SPLIT STOCK: Entertainment giant Walt Disney Co., whose stock has surged to record levels this year, approved a four-for-one stock split Tuesday. Chairman Michael Eisner announced the plan at the company's annual meeting. Disney's stock closed up 3 1:2 at $146 1:2. The stock split is scheduled for April 20. The move is an attempt to make the stock accessible to more investors. LIMITED REPORTS RECORD EARNINGS: Though the Limited reported record earnings Tuesday for its fourth quarter, which ended Feb. 1, the retailer expressed disappointment. Net income jumped 16% to a record $200 million, or 55 cents a share, from $172 million, or 48 cents a share, a year earlier. Chairman Leslie Wexner said sales and operating earnings were below expectations. Net income for 1991 rose just 1%. CHRYSLER OFFERING DETAILED: Chrysler sold about $850 million in preferred shares last week in a private placement, industry analysts said Tuesday. Analysts said investors were so attracted to the shares' 9.25% yield, Chrysler boosted the number of shares offered and raised $450 million more than planned. RATES UP AT TREASURY AUCTION: The Treasury Department sold $10.8 billion in three-month bills at an average discount rate of 3.83%, up from 3.72% last week. Another $10.8 billion was sold in six-month bills at an average discount rate of 3.93%, up from 3.80% last week. GOLD FALLS IN NEW YORK Gold fell 30 cents Tuesday on the New York Commodity Exchange in New York, slipping to $353.40 a troy ounce. Republic National Bank later quoted a bid of $352.80, down 45 cents. Silver lost 10 cents on the Commodity Exchange and closed at $4.052 a troy ounce. Silver fell in London to a late bid of $4.05 from Monday's $4.16. SPECIAL PACKAGE ON PRIMARY: 100-150 POINT DROP EXPECTED: IDS Advisors President Peter Anderson said Friday that a 35% to 40% New Hampshire vote for Pat Buchanan would knock 100 to 150 points off the Dow in a few days. "I'm sticking to my guns," he says. But Anderson points out that just because Bush struggled in the primary doesn't mean he will in the next one. UNCERTAINTY CREATED BY PRIMARY: Michael Metz, strategist at Oppenheimer & Co., says Buchanan's strong showing is "a negative that'll create a lot of uncertainty in the market." It's now a question of whether Bush can win re-election, he says. "The market is in a mood to go down, and this will give investors a rationalization to sell." But Metz sees only a 50- to 60-point Dow drop the next day or two. STRONGER DEMS MAY JUMP IN: Metz says that what's most important is "the poor Bush showing means there's a lid on the market as far as the eye can see." Prudential Securities analyst Larry Wachtel sees a possible 100-point Dow drop the next two days. Unlike Metz, he doesn't see lasting effects. Still, Wachtel says, Bush's showing may prompt big hitters to enter the Democratic race. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Wednesday at 3224.73, after closing down 21.24 Tuesday. The New York Stock Exchange composite opens at 225.65, down 2.51. The American Stock Exchange market value opens at 409.20, down 5.07. The NASDAQ OTC composite opens at 626.41, down 10.02. DOLLAR OPENS MOSTLY UP: The dollar opens mixed on foreign markets Wednesday. It opens at 0.5708 British pounds, up from 0.5639; 5.5221 French francs, down from 5.5270; 128.08 Japanese yen, up from 127.65; and 1.6470 German marks, up from 1.6250. (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. Personal Investing Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. 08:0002190000D0219 REAL- R N Banking-industry-recovers............. A D0219 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