Dow Gains 1.61 but Other Key Indicators Sag
The Dow Jones industrial index posted a tiny gain Tuesday but broader market measures slumped in what some analysts said was a reflection of deepening worries about inflation and interest rates.
The Dow Jones index of 30 industrials, which climbed 38.75 points last week, eked out a gain of 1.61 points to close at 2,326.43.
But declining issues outnumbered gainers by nearly 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks.
Stock prices traded lower for much of the session, weakened by falling Treasury bond prices and disappointment over the tone of remarks to Congress by Federal Reserve Chairman Alan Greenspan. Investors were hoping that Greenspan would strike an aggressive anti-inflation stance, but they concluded that his remarks signaled no new initiatives.
“Greenspan’s answers were ambiguous. He didn’t seem to show the confidence the market wanted in the inflation fight,” said Piper Jaffray & Hopwood market analyst Ed Nicoski.
However, late-afternoon buying and a recovery in bond prices breathed new life into stock prices. The key 30-year Treasury bond pared early losses, ending slightly lower at 98 5/32, down 1/16. The yield was unchanged at 9.05%.
Analyst Michael Metz of Oppenheimer & Co. said the market was consolidating gains of the previous week, when the Dow index rose 39 points. He said that for much of the day new buyers were evenly matched by those taking profits.
“The market seems to have lost its momentum, its gusto, the urgency to buy coming off the lows of last November,” said Edward P. Nicoski, a market strategist for the investment firm Piper Jaffray & Hopwood Inc. in Minneapolis.
He said traders were becoming more concerned about inflation, a concern that Federal Reserve Chairman Alan Greenspan acknowledged in an appearance before the Senate Banking Committee.
Texas Eastern Active
Volume on the floor of the Big Board came to 141.95 million shares, down from 159.52 million in the previous session.
The U.S. financial markets reopened Tuesday for the first time in three days after being closed Monday in observance of the President’s Day holiday.
Few traders appeared ready to buy stocks in advance of today’s scheduled report on consumer prices in January. Earlier this month, the government reported a bigger-than-expected rise in producer prices in January.
Sonat Inc. was the most active issue on the NYSE, rising 7/8 to 32 after a pair of 2 million share blocks were traded.
Texas Eastern was second most active on the NYSE, jumping 3 7/8 to 52 3/8. On Monday, the company agreed to a $53-a-share takeover bid from Panhandle Eastern.
Polaroid fell 3/8 to 43 3/8. The company said it was beginning a tender offer of $50 a share for up to 22% of its stock in a bid to fend off a hostile suitor.
Holly Corp. surged 9 5/8 to 35 1/4 on the American Stock Exchange after disclosing it had hired an investment adviser to consider the possible sale of the company and other alternatives.
Stock prices fell sharply in late heavy selling and erratic trading on the Tokyo Stock Exchange on Tuesday. The Nikkei 225-share index fell 197.00 points to close at 31,980.08.
In London, stock prices closed slightly lower in reaction to early weakness on Wall Street. The Financial Times 100-share index fell 4.8 points to close at 2,061.0.
