Stocks Fall as Oil Prices Jump

Blue-chip stocks ended with double digit losses Wednesday as the market was stunned by a jump in crude oil prices and weakness in bonds. The Dow Jones industrial average ended 68.08 points lower at 7,689.98, giving back a large chunk of Tuesday's 153-point gain. In the broader market, declining issues led advances 15-12 on heavy volume of 606 million shares on the New York Stock Exchange. The Nasdaq index lost 6.19 to close at 1446.24. Crude oil for August delivery rose 49 cents to $19.52 a barrel on the New York Mercantile Exchange, after OPEC members meeting in Vienna agreed to stick to their export quotas. The implication is that the producers would stop pumping the 2 million barrels a day in excess of the quota limit.

Dollar Down Against Yen

The dollar ended lower against the Japanese yen Wednesday after a report showed surging optimism among big Japanese manufacturers. The report suggests Japan's huge trade surplus with the United States will continue to grow, analysts said. The dollar fell sharply in Tokyo trading after the Bank of Japan's quarterly report, called the tankan, showed surprising confidence among major Japanese industrialists. The dollar fell to 113.83 yen late Wednesday from 114.92 on Tuesday.

Home Sales Up; Durable Goods Off

Analysts say a pair of economic reports released Wednesday indicate slow but steady U.S. economic growth in the second quarter. The National Association of Realtors said sales of existing homes climbed 4.4 percent in May to an annual rate of 4.24 million, despite firmer prices and slightly higher mortgage rates. Separately, the Commerce Department said orders for long-lasting durable goods like cars and refrigerators fell 0.6 percent last month to a seasonally adjusted $176.1 billion after a revised 1.8 percent jump in April. Analysts say the reports -- both of which were contrary to expectations -- are more signs that the economy is slowing from its rapid 5.8 percent rate of growth in the first quarter, but still growing solidly.

Asbestos Makers Suffer Setback

In a ruling that may affect the historic tobacco agreement, the U.S. Supreme Court Wednesday rejected a settlement between asbestos manufacturers and about 100,000 people claiming injuries from the once widely used substance. In a defeat for 20 former asbestos companies, the justices upheld a U.S. appeals court ruling that threw out the $1.3 billion settlement. The High Court said the interests of the various plaintiffs were too diverse and too much in conflict to meet the class-action lawsuit definition under federal court rules. The asbestos ruling could make it harder to reach an overall federal court settlement as a way of handling mass tort liability claims.

Part of Tobacco Pact Rejected

Public health advocates meeting in Washington to review the proposed tobacco settlement have rejected a key part of the deal. The advisory council called any constraints on the Food and Drug Administration's ability to regulate nicotine "absolutely unacceptable." The agreement recognized FDA authority to regulate nicotine, but set conditions that the health advocates say leaves too many loopholes for the industry to effectively wiggle out of regulation. The council, headed by former FDA commissioner David Kessler and former Surgeon General C. Everett Koop, also demanded that tobacco companies face "predictable and severe" financial sanctions if they fail to meet goals for cutting youth smoking. Their recommendations are expected to carry considerable weight as Congress considers the tobacco settlement.

Insider-Trading Law Upheld

One of the federal government's toughest enforcement weapons in fighting insider-trading abuses has survived the scrutiny of the U.S. Supreme Court. The justices ruled today that the government was correct in its interpretation of a section of the securities law that makes it a crime for a person to use confidential information in securities trading. The justices reversed a lower-court ruling. That ruling threw out the conviction of James O'Hagan, a Minneapolis lawyer whose firm had been retained by the London-based Grand Metropolitan over its 1988 takeover of Pillsbury.

Liposome Stock Plunges

Liposome says its test drug to treat acute respiratory distress syndrome failed to perform as expected, sparking a massive sell-off of its shares. Liposome's stock plunged 15 1/4 to close at 9-9/16 on Nasdaq, where it was the biggest loser of the day and the most active issue. Liposome, a biopharmaceutical company based in Princeton, N.J., said the Phase III study of its Ventus drug showed no difference between patients receiving the drug or a placebo. Morgan Stanley, which had previously rated the stock outperform, downgraded it to neutral.

Clinton Endorses Clean Air Plan

On the eve of his address to the U.N. Earth Summit, President Clinton Wednesday endorsed tough new U.S. air pollution controls. Speaking in Nashville, Tenn., Clinton said he had decided to proceed with proposed new controls on soot and smog. Under the plan, major producers of smog and soot such as big power plants would be required to meet new lower standards and violators could be severely punished. U.S. environmental and health groups are hailing the plan. But the plan faces fierce opposition from powerful business and local government groups. The U.S. Conference of Mayors has voted to oppose it, saying the proposed standards would be so costly they could jeopardize local economies.

Morgan Stanley Reports Earnings

Morgan Stanley Dean Witter Discover & Co. is reporting quarterly results for the first time since the merger of the two brokerage companies. The merged entity says it earned $509 million in its second quarter, down from $551 million a year earlier. The results included $63 million in one-time costs related to the merger. Excluding those and other acquisition-related charges, Morgan earned $590 million, or 97 cents a share, up from 92 cents a share earlier. The merger of Morgan Stanley and Dean Witter Discover & Co. was completed May 31.

Corn Prices Hit Two-year Low

Corn prices fell to their lowest level in more than two years Wednesday as crop-growing weather in the U.S. Midwest turned nearly ideal. Warm temperatures plus showers and high humidities enhanced crop production prospects, traders said. At the Chicago Board of Trade, corn for July delivery touched a low of $2.55 3/4 a bushel, the lowest level for the nearby contract since May 1995. July closed four cents down on the day at $2.56 1/4. At the Chicago Mercantile Exchange, feeder cattle futures closed higher, boosted by the falling cost of key feed ingredients such as corn.

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