Dow Declines 1.17 in Profit Taking
Stocks edged lower Tuesday as profit taking spoiled positive comments from Federal Reserve Board Chairman Alan S. Greenspan indicating that the economy might avoid a widely feared recession and interest rates could moderate.
“They tried taking stocks up, they tried taking them down and we ended going nowhere at all,” said Jon Groveman, a trader with Ladenburg Thalmann & Co.
“The market took a timeout,” said Alfred E. Goldman, a market analyst for A. G. Edwards & Sons Inc. in St. Louis.
The Dow Jones index of 30 industrial stocks, up 25.70 on Monday to its highest level in six weeks, slipped 1.17 to 2,039.12.
The market’s best-known indicator had risen more than 144 points between Feb. 8 and Monday’s close, which was its highest finish since Jan. 7.
Advancing issues outpaced losers by a narrow margin among issues listed on the New York Stock Exchange, with 767 up, 725 down and 493 unchanged.
Big Board volume rose to 192.26 million shares from 178.93 million shares on Monday.
The stock market has benefited recently from indications that the economy may be stronger than had been expected, leading some analysts to take an optimistic view of the outlook for corporate profits.
But there is plenty of uncertainty about the economy’s prospects.
In a new report, the government said orders to U.S. factories for durable goods plunged 2.8% in January, the biggest decline in a year.
A decline had been expected, however, in the wake of an unusually sharp 4.1% rise in December.
Greenspan spent most of the day outlining for a congressional panel the central bank’s monetary goals and his views on economic issues.
He said the risk of a recession is as great as the risk of renewed inflation, but added that neither appears imminent.
He also confirmed that the central bank, in an effort to keep the recovery alive, had taken a “small easing step a few weeks ago.”
But stock market watchers found little revealing in the chairman’s remarks.
“They were strictly vanilla--just as expected,” Goldman said.
Among the most active issues on the NYSE were several utility stocks that will soon pay dividends. Philadelphia Electric was the most active, finishing unchanged at 19 7/8.
Lockheed, meanwhile, said it could not account for the heavy trading in its stock, which closed at 44, off 5/8. In composite NYSE trading, 1,079,100 shares exchanged hands, compared to an average daily volume of 343,605 shares, Dow Jones reported.
On Monday, Shearson Lehman Hutton analyst Gary J. Reich raised his investment rating for the Calabasas defense firm, telling Shearson’s sales force that Lockheed would be willing to discuss a takeover overture.
Lockheed spokesman David Crowther said he had no comment on whether the company would be receptive to a takeover offer, adding that the company has a policy of not commenting on takeover rumors, Dow Jones said.
Texaco fell to 42. It said it had agreed to pay the government $1.25 billion to settle an oil pricing dispute. Other oil stocks were lower, with Occidental Petroleum off 3/4 at 26, Atlantic Richfield down 1/2 at 78 1/2 and Mobil down 5/8 at 44 3/8.
In London, the Financial Times Stock Exchange 100-share index finished at 1,757.9, up 10.7. The index rose as much as 25 in early trading, bolstered by strong gains overnight in the New York and Tokyo stock markets.
In Tokyo, stocks closed higher, led by large capital issues such as steels and heavy industrials. The Nikkei index of 225 selected issues gained 102.74 to close at 24,949.45. It was the index’s ninth consecutive advance.
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