Star Tribune from Minneapolis, Minnesota • Page 11

business news Minneapolis Tribune Tuesday, May 12, 1981 Section A 'Part Prime climbs to 19.5 percent Prime lending rate Associated Press New York, N.Y. Banks large and small raised their prime rates to 19.5 percent Monday. Many said the upward trend was not about to stop as the federal government tries to control Inflation by restricting credit. Chase Manhattan Bank, the third-largest commercial bank, started yesterday's wave of increases. It was followed quickly by Bank of America in San Francisco, the nation's largest bank; Citibank in New York, No.

2 in size, ranked by deposits, and by all the other money center banks along with many regional and smaller banks. (Several major Twin Cities banks raised their prime rate yesterday from 19 percent to 19.5 percent They were: First National Bank of Minneapolis, Northwestern National Bank of Minneapolis and First National Bank of St. Paul. National City Bank of Minneapolis announced its prime rate will be raised to 19.5 percent effective today. (Meanwhile, Northwestern National Bank of St.

Paul, recognizing that the "prime" rate no longer is, as it once was, the rate charged most-favored corporate clients, said that it has dropped the term prime rate in favor of a "base" rate. It raised its base rate to 19.5 percent yesterday. (Banks have increasingly lent money at interest rates below the prime rate to valued customers.) The prime last stood at 19.5 percent in late February, when it was declining from a record 21.5 percent peak in December 1980. The prime began rising again in April after falling as low as 17 percent. Small business borrowers pay one percentage point or more above the prime for their loans.

Consumer loans are not based on the prime, al though movements in the prime rate often signal trends in other financing charges. "Everybody's scared," said Paul Smith, executive vice president and chairman of the finance committee of Security Pacific Bank in Los Angeles. "They're really believing the Fed (Federal Reserve Board) for the first time in a long time," he said. The recent volatility of the prime is directly tied to the Fed's weekly announcements of the size of the nation's money supply. Those late-Friday reports have been followed by prime rate increases regularly since it started to climb upward again April 1.

Last Friday, the Fed said the supply of money in circulation declined slightly less than a percentage point for the week ending April 29. But for the full month, it continued to rise a seasonally adjusted 12.5 percent, the Fed said. Percent 21 j- I 16 15 14 1980-1981 13: i i i A -m 1 iiiii mm 11 'li im BuwJ. -a. ..1.

Dow Jones tumbles 12.96 points panies. Stock prices have been tumbling since the Dow closed at an eight-year high of 1,024.05. on April 27. Fears of continued high Inflation rates and a persistent "6how-me" attitude by investors on President Reagan's economic program reflect the inherent skepticism in securities markets. Yeterday's sell-off in stocks was a virtual replay of last week's sharp setback, when prices tumbled in response to an increase in the prime lending rate.

Exactly one week earlier, after the prime rate was In creased by a half-point, to 19 percent, the Dow industrials dropped 16.48 points. Japanese-based consumer electronics stocks showed the best group strength in a market where most other industry sectors moved lower. Trading on the New York Stock Exchange slowed to 37.6 million shares from Friday's 41.9 million. Yesterday's turnover was the lowest since 30.5 million shares changed hands on March 30, the day President Reagan was shot. The Big Board closed at 3:17 p.m.

in that day's abbreviated session. Market analysts said that, quite apart from rising interest rates, the Federal Reserve Board appears to be clamping down on the availability of reserves to the banking system a situation that, if continued, would mean that less credit would be available to the broad spectrum of borrowers. M. Lowenstein, the market's biggest percentage loser, plunged 13y2 points to 25'8. Lowenstein said that previously announced talks on its possible acquisition by a large, unnamed textile company have been terminated.

Energy stocks, which had been relatively strong in the last two weeks, posted sizable losses on the Big Board. Declines on the order of 2 points each appeared in Mobil, Atlantic Richfield, Standard Oil Company (Ohio), Standard Oil of Indiana and Standard Oil of California. Transportation and computer issues also showed losses. International Business Machines, the volume leader, fell 1 to 56. By Vartanig G.

Vartao New York Times Service New York, N.Y. Against a backdrop of rising interest rates and political worries abroad, stock prices tumbled anew Monday. The Dow Jones industrial a veif age fell 12.96 points to 963.44, reaching its lowest level since late February. Meanwhile, bond prices edged lower in nervous trading as yields hit near-record highs. Long-term government bonds now return nearly 14-percent.

Wall Street analysts laid the blame for most of the stock market sell-off to another increase in the prime rate, Several major banks their basic lending charge by a half-point, to 19 percent. "This latest increase in the prime rate is telling us something else about prospects for the stock market," said A. Marshall Acuff port-. folio strategist at Smith Barney, Harris Upham Co. "There now exists the likelihood of moderating business activity in the second half of 1981, and that means some deterioration in earnings prospects for many companies.

That's what investors are increasingly focusing on." Investors also were focusing on the. latest crisis in Lebanon and the election Sunday of Francois Mitterrand, the Socialist Party candidate, as president of France. Mitterrand has proposed sweeping changes in domestic policy, including the nationalization of banks and insurance com- Stocks at a glance Staff Photo by Art Hager Construction strike stalls projects Phil Nelson, a striking bricklayer, was on picket duty Monday outside the construction site of the Lutheran Brotherhood building in downtown Minneapolis. Bricklayers, roofers and sheet metal workers have been on strike since May 1. The three unions set up picket lines Friday, halting work on virtually all major construction sites in Minneapolis and St.

Paul because members of nonstrlking unions are respecting the picket lines. Members of Sheet Metal Workers Local 34 yesterday rejected a contract offered by the Sheet Metal and Roofing Contractors Association. The offer, an Increase of $5.15 an hour In wages and benefits over three years, was the same as that accepted last week by Sheet Metal Workers Local 76 In St. Paul. The bricklayers and the Associated General Contractors met last Thursday but made no progress toward a settlement.

U.S. Steel raises its prices; others expected to follow May 11, 1981 NYSE Mon Advanced 441 Fn NYSE Index Dow Jones averages Declined .114 Unchanged 360 131 Close Chg. 422 lnde 75 05 1.08 434 Industrial 87 39152 1887 Transport 74 76 1 43 23 Utility 37 840 09 21 Finance 72.820.52 Ooen 30 Ind 976.86 20Trn 418 53 15UII 105.92 65 Stk 378 02 High 979 47 419 62 106 62 379.23 Low 959 83 408 22 104 87 30.92 Oose 96344 410.28 105 63 372.66 Cny. -12 96 -8 12 0 07 Totil istuet New hlghi New kiwi .1947 31 Approx. total sales 37,440,000 Dow Jones Industrial Average Most active Volume Close Chg.

IBM 691,900 56 Lowenstn ...644,900 25' 13'4 SeariRoeb ..609,100 18 Conocolnc .....520,500 55 1H Sony Corp 481,000 20 1 ....423,100 55H StorgeTecti 369,100 32 NLTCoro ....343,000 35' '4 DowChem ...335,200 32 1 Gen Motors' .320,600 52' Vt Uniroval .....296400 8V V4 Gen Elec 275,500 63' Exxon 268.200 65 Texaco Inc ...264,000 35 1' Xerox CP 253,100 56'4 Amex Amex closing index 357.46 Approx. total sales 4,730.000 Most active Volume Close Chg. HudsBOilg ...294,600 25 I TexssAirCp .279 500 GuKCana 229400 21le TubosMex ...116,100 6" HouOilTr 96.000 JO 1 Instrum Svs ...86 100 1 RangerOil 82,800 13' 'b Svntex Corp 7UO0 55'n v8 Dataprod 63,700 33' WangB 61,500 40 1 Amex gainers Last Net Pel. Hoffman Ind 21 17 6 Nat Silver 7 13.5 SnDiegPtc 6-e 114 Bradtrd Nal 3 fi VM 9 1 D'l-g P'o 6 "2 8 9 Amex losers Last Net Pet. Nortek lie 11? Resorts Wt 5 10 6 Now Idna 2' 10 5 Tinnelics 5 10 4 AmCapilCo 2 10 0 10; 30 11 12 1 I 3 4 18-, 16- 14- 12- 10- 8- 6- 4- J- 0 i -8- ls -10- I -14--16- -18-1 I I I I I I I yWi Wk oM Mm NYSE gainers Last GH Res Pta 36 Matsushita 72" Cont Cop 6rt Glal.25pf VA OhEd4.S6pf 32Vi Net Pet.

3 91 5 84 VI 83 8 3 8.3 NYSE losers Last Net Pet. Lowenstein 25'b 13' 35.0 VanDornCo 18 '4 2'4 110 AmAirlnWI 51 9 8 HeleneCurt M'j 11 8 8 AmrSiLFIa 14'j lit 8.7 Twin Cities jobless rate dropped by .5 in March Associated Press The unemployment rate in the Twin Cities dropped more than half a percentage point in March, to 4.7 percent, the state Economic Security Department reported. The February rate was 5.3 percent. The national rate was 7.7 percent and the Minnesota rate was 6.2 percent in March. The jobless total in the Twin Cities Price change In points Monday Tribune News Services Pittsburgh, Pa.

U.S. Steel Corp. boosted prices Monday, setting the stage for similar moves by other steel makers. The amount of the increases reportedly range from 8 percent on bar steel, used widely in manufacturing, to 9.7 percent for sheet and strip, used extensively in the auto industry. The nation's largest steel manufacturer did not disclose the actual' amounts of the increases, which are effective in June, beyond saying that they would include a JlO-a-ton rise to cover higher energy costs.

However, customers reported that the increases would range from $35 to $45 a ton. U.S. Steel said the increases would "partially offset" the continued cost increases "of employment, purchased goods and services, and include the energy-related increases on other products." The company said the higher prices would improve total steel revenues by about 4.4 percent. U.S. Steel's revenues on its steel products totaled $8.74 billion in 1980.

National Steel the nation's fifth-largest producer, said it was studying the price announcement. Other steel makers, including second-ranked Bethlehem Steel declined comment. The steel-price increases did not surprise most Wall Street analysts. "This is more or less in line with what I expected The market is relatively strong," said Joseph Wy-man of Shearson Loeb Rhoades in New York. "You can see that from the operating rate of the Industry which is approaching 90 percent." Charles Bradford, a steel analyst with Merrill Lynch, Pierce, Fenner Smith in New York, said volume is much better than he expected.

"Shipments are running more than a million tons per quarter above our forecast," he said. "We think it's going into inventory. The real question is, 'Will price increases slow that Both analysts said they expected other steel makers to follow U.S Steel's move. One stee! purchaser found the form of U.S. Steel's price announcement unusual, noting that he does not remember the company ever levying an energy charge.

"Instead of just making a product increase, they sort of camouflaged it," said Lou Siegel of Levinson Steel a Pittsburgh steel supplier. Siegel said he thinks the market is weakening and that discounting on steel list prices is common, an indication that supply exceeds demand. NASDAQ index High Low Last Chg Como ...214 95 212 77 212.79 2 05 Inds 270 62 267 30 267 33 3.17 Tran 183 69 179 93 180 35 2 10 Util 166 39 163.68 164.27 1.14 Approx. fetal tales 32,78.800 Dain Bosworth regional index Statistical averages ot 85 securities of maior firms in Minnesota, North Dakota, Soulh Dakota. Montana, Iowa, Nebraska ana western Wisconsin; compiled and reported bv Dam Bosworth Inc.

Indices based on 100 as of Dec. 31, 19S5. Cng Chg. Poor! 261.78 223 Comp. Ind 195.56 2 45 Finance M37 2 .4 Mfg ...250 78 4.21 Retail 241 90 3 57 Utility 70.54 Trans 199 03 4 66 was 54,600 in March, down 5,300 from February but 8,900 higher than March 1980.

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