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 Tue, Mar 10 1992 Date: Tue, 10 Mar 92 05:44:45 EST Message-ID: 03-10 0000 DECISIONLINE: Personal Investing USA TODAY Update March 10, 1992 Source: USA TODAY:Gannett National Information Network STOCKS OFF SLIGHTLY: The stock market, still reeling from losses last week, turned in a mixed performance Monday. The Dow Jones industrial average trimmed 6.48 points to 3215.12. Over-the-counter stocks also slid, but other averages eked out gains. On the New York Stock Exchange, gaining stocks beat losers 884 to 852. FEAR KEEPING RATES UP: While everyone from Federal Reserve Chairman Alan Greenspan to President Bush to economists want long-term interest rates to drop, a fear of inflation, fear of federal deficits and fear of an economy that's showing signs of strength are keeping rates high. Those fears add up to trouble: Long rates, which have risen a half-percentage point this year, could strangle a recovery. (For more, see special Rates package below.) KEYCORP MAKES ACQUISTION: Albany, N.Y.-based bank-holding company KeyCorp Monday said it will buy Puget Sound Bancorp in a deal valued at $807 million. Analysts say the acquisition of Tacoma-based Puget Sound makes sense. Each Puget Sound share will be exchanged for 0.88 KeyCorp share. Keycorp will issue 17.6 million shares to complete the deal. KeyCorp fell 1 5:8 to $44 1:4. Puget Sound slipped 1:8 to $36 1:8. CHARTER ONE BUYS 1ST AMERICAN: In another bank deal Monday, Charter One Financial agreed to buy First American Bancorp for $42 million, or $19.06 per First American share. Cleveland-based Charter is trying to position itself to compete with larger regional banks in Ohio - such as BancOne. Charter shares fell 1:4 to $30 1:4. First American shares jumped 5 to $16 1:4. FREDDIE MAC SOARS: Shares of Federal Home Loan Mortgage surged 10 1:8, or 9%, the past two trading sessions, closing at $122 7:8 Monday. Freddie Mac said Friday that it would sell $500 million in preferred stock, hike its first-quarter dividend 14% to 57 cents a share and split its stock 3-for-1. Freddie Mac plans to use some cash from the stock sale to buy and hold mortgages for its own portfolio. BANK EARNINGS ARE UP: U.S. banks earned $18.6 billion last year, the most since 1988 and up 15% from 1990, the Federal Deposit Insurance Corp. says. But the FDIC attributes the improvement entirely to one-time gains from the sale of bonds and other securities. Bank operating earnings - which exclude securities sales - fell slightly to $14.8 billion last year from $15 billion in 1990. BLUE-CHIP VIEW IS ROSY: The economy is headed for better times, according to the latest survey of 53 top economists by Blue Chip Economic Indicators newsletter. Though the consensus estimate of growth this quarter fell slightly to a 0.4% annual rate from 0.5%, estimates for the rest of the year were raised. For the next three quarters, annual growth rates are estimated at 2.4%, 3.3% and 3.4% growth. RATES UP AT TREASURY AUCTION: The Treasury Department sold $11.4 billion in three-month bills at an average discount rate of 4.02%, unchanged from last week. Another $11.4 billion was sold in six-month bills at an average discount rate of 4.13%, up from 4.10% last week. SPECIAL PACKAGE ON RATES: BOND YIELDS UP: Last week, Federal Reserve Chairman Alan Greenspan tried to jawbone the bond market into pushing long rates down. Inflation, he said, is moving lower, which should mean "lower longer-term rates as well." But his message hasn't gotten through. Monday, the yield on 30-year Treasury bonds was 7.87%, compared with its recent low of 7.39% Jan. 7. MARKET HAS NO FAITH IN FED: Rates are being held up by evidence of recovery. Bond traders expect inflation to pick up as the economy recovers. And investors demand higher yields as a hedge against inflation. Another factor: Fear of the Fed. "There's no real faith in the bond market" that the Fed will fight inflation at the expense of economic growth, says Greg Jones, economist at consulting firm MMS International. 30-YEAR T-BOND SEEN AT 7%: James Annable, chief economist at First National Bank of Chicago, says fears of a budget-busting tax:spending package will fade as it becomes clear that Congress and Bush can't agree on a plan leading to a drop in long rates. Inflation fears also should subside if the recovery remains weak. One forecast: 30-year T-bond yields could be at 7% by midyear, says MMS economist Kim Rupert. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Tuesday at 3215.12, after closing down 6.48 Monday. The New York Stock Exchange composite opens at 224.15, up 0.36. The American Stock Exchange market value opens at 407.21, down 0.74. The NASDAQ OTC composite opens at 615.82, down 0.13. DOLLAR OPENS MOSTLY DOWN: The dollar opens mixed on foreign markets Tuesday. It opens at 0.5807 British pounds, down from 0.5822; 5.6665 French francs, down from 5.6721; 131.90 Japanese yen, up from 131.75; and 1.6635 German marks, down from 1.6676. (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. Personal Investing Editor: William Snoddy. (1-919-855-3491) 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