Blue Chips Edge Lower; Dollar Falls Against Yen

Blue-chip stocks edged lower and the dollar declined against the Japanese yen in quiet pre-holiday trading Wednesday, as nerves settled and overseas markets appeared to stabilize.

The Dow Jones industrial average closed down 14.17 points at 7,794.78. In the broader market, advancing issues led decliners 7 to 5 in light trading on the New York Stock Exchange.

“It was kind of a nonevent. I don’t expect too much action on Friday, either,” said Bill Meehan, chief market analyst for Cantor Fitzgerald.

U.S. financial markets will be closed today. The bond market will be closed Friday, and the stock market will close early at 10 a.m. Pacific time.

The dollar fell against the yen but gained against the mark after the Bank of Japan, the nation’s central bank, and the Ministry of Finance both promised to provide liquidity to stem any run on funds.

Because Germany’s exposure to Asia’s currency crisis is considered to be less than that of the United States, investors had recently bought marks as a safe investment.

After a shortened pre-holiday session, the dollar traded at 126.97 yen, down from 127.07 on Tuesday.

The dollar bought 1.7630 marks, its highest level in four weeks, up from 1.7490 on Tuesday.

Persistent talk that more Japanese banks could fail, however, minimized the dollar’s losses, traders said, noting that market gloom had been increased by news that Moody’s Investors Service had considered downgrading five Japanese banks.

U.S. Treasury bonds, which also traded in shortened hours, gained, with the yield on the key 30-year at 6.04%, little changed from Tuesday’s 6.05%.

Wall Street opened strongly after stocks rose 1.1% in Tokyo amid hints of a government-led rescue for Japan’s struggling financial system.

Tokyo’s partial recovery from Tuesday’s 5% slide helped push Hong Kong and other Asian markets higher. And in Europe, Frankfurt’s DAX index rose 1.7% and London’s FTSE-100 rose 0.6%.

U.S. stocks also drew a boost from a series of reports that generally reinforced hopes that economic growth will remain moderate enough to keep inflation in check.

The Commerce Department’s revised calculation of third-quarter economic growth came to 3.3%, matching the robust pace of the second quarter, but down slightly from an earlier estimate of 3.5%.

“When you added all the numbers up, it showed you an economy moving along at a modest pace,” said Larry Wachtel, market analyst at Prudential Securities.

The Standard & Poor’s 500-stock list rose 0.82 point to 951.64, and the NYSE composite index rose 0.33 point to 497.31.

The Nasdaq composite index posted a slightly larger gain, rising 5.46 points to 1,594.50 with help from leading technology names such as Microsoft, up $2.56 to $141.56, and Dell Computer, up $2.56 to $83.88.

The Russell 2,000 index of smaller companies rose 1.25 points to 428.16.

Among Wednesday’s highlights:

* The Dow was dragged lower by Coca-Cola, down $1.75 to $62.38, and Procter & Gamble, down $2.06 to $75.69.

* The S&P; telephone index contributed the most to the S&P; 500’s gain. SBC Communications rose $3.69 to $73, Bell Atlantic rose $1.56 to $88.25 and US West Communications Group gained 88 cents to $45. All reached records.

Among long-distance companies, Sprint climbed $1.50 to $58.50 and GTE gained $1.75 to $49.88.

* Gold prices ended below $300 an ounce, the first time in 12 1/2 years, as central bank lending, producer hedging, Asian disinvestment and a stronger U.S. dollar extended the 18-month-old bear market in the precious metal.

Comex February gold, the active contract, ended down $3.60 at $296.90, a new low for the contract, from Tuesday’s price of $300.50.

The drop in gold prices led gold stocks to post the biggest percentage loss in the S&P.; Barrick Gold fell 44 cents to $16.56, and Newmont Mining fell 63 cents to $30.19.

* Oil issues fell as the price of crude dropped to $19.46 a barrel on the New York Mercantile Exchange from $19.73 on Tuesday. Chevron fell 94 cents to $79.81, and Texaco lost 44 cents to $56.81.