STOCKS : 7-Day Market Rally Ends as Dow Dips 0.68
Blue chip stocks edged lower Wednesday in moderate trading as profit taking and a weak bond market snapped a seven-day winning streak that added nearly 90 points to the Dow index.
The Dow Jones index of 30 industrials, up 93.83 points over the past seven sessions, slipped 0.68 to 2,732.88.
In the broader market, advancing issues just barely nosed out declines in nationwide trading of New York Stock Exchange-listed stocks, with 760 up, 733 down and 501 unchanged.
Big Board volume rose to 152.22 million shares from 144.23 million in the previous session.
Analysts said both the stock and bond markets seemed to be on hold while investors watched the progress of the Treasury’s quarterly auction of bonds and notes.
Stocks rallied suddenly in late trading on news of a well-received 10-year Treasury note auction, but the rally fell just short of pushing the Dow into the plus column.
“The 10-year auction, which everyone was positive was going to go poorly, went very well and that’s what helped the market turn direction,” said Newton F. Zinder, senior vice president at Shearson Lehman Hutton.
The auction was the second leg of a three-day, $30.5-billion note and bond sale that will allow the Treasury to pay off existing debt and raise more money for government expenses. On Tuesday, the Treasury sold $10.5 billion of 3-year notes and today it will sell 30-year notes.
Traders are anxiously awaiting the results of the entire refinancing as a guide to the future direction of interest rates. Traders said the well-received auction of 10-year notes helped spur a number of late computerized buying programs on the stock market.
“I think the Treasury offering of the 10-year seemed to be a positive catalyst for program buying,” said Jerry Hinkle, co-manager of trading at Sanford C. Bernstein & Co.
Traders and analysts said concern about the outcome of the note auction, a weak dollar and a soft bond market gave investors a reason to take profits after the seven-day winning streak.
“After the big run-up we’ve had there was bound to be some pause along the way,” said Eugene Peroni, chief technical analyst with Janney Montgomery Scott.
Among individual stocks, Bristol-Myers Squibb was the most actively traded NYSE issue, gaining 1/2 to 58 1/2 on more than 2.2 million shares. Paine Webber analyst Ron Nordmann reaffirmed a “buy” rating on the stock based on optimism about the company’s anti-AIDS drug, DDI.
Sotheby’s plummeted 3 1/8 to 16 1/2 after an auction on Tuesday generated lower-than-expected sales.
Cray Research gained 2 5/8 to 46 on expectations that the company will next week introduce a less expensive version of its supercomputer.
Millicom jumped 1 1/4 to 19 1/2 after receiving experimental licenses to build and operate personal communications networks in Houston and Orlando, Fla. Competitor MCI Communications slipped 3/8 to 38 5/8.
Tokyo stock prices closed slightly lower because of investor profit taking after five consecutive trading days of gains The key 225-share Nikkei index exceeded 31,000 points in an early morning surge but later eased, to close down 24.97 points at 30,945.61.
The London stock market ended broadly lower in lackluster trading. The Financial Times 100-share index fell 19.3 points to close at 2,162.7. And in Frankfurt, West Germany, stocks finished a dull session mostly lower. The 30-share DAX index slipped 2.73 points to end at 1,896.55.
CREDIT Bond Prices Fall Despite Hot Auction Bond prices fell despite the completion of the Treasury’s successful sale of another of the 10-year notes.
The Treasury’s benchmark 30-year bond finished down 13/32 point, or $4 per $1,000 face amount, while its yield, which rises when prices fall, rose to 8.86% from 8.82% late Tuesday.
Prices moved generally lower in advance of the announcement of the results of the auction. Kevin Flanagan, a money market economist for Dean Witter Reynolds Inc., said prices were depressed by weakness in the dollar and worries that demand for the 10-year notes was weak.
But the auction results, announced late in the session, turned out better than expected.
Market watchers say the strong demand for three-year and 10-year notes may not necessarily spill over into today’s scheduled auction of $10 billion in 30-year bonds. That sale will complete the refunding auction.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.188%, unchanged from late Tuesday.
COMMODITIES Energy Prices Rise on Supply Jitters Energy futures prices surged on the New York Mercantile Exchange amid concerns that gasoline and crude oil inventories would be tight in the near term.
On other markets, grains and soybeans were mostly higher, precious metals futures gained slightly; copper prices advanced and livestock and pork prices gained.
West Texas Intermediate crude oil settled 1 cent to 71 cents higher, with the contract for June delivery at $18.99 a barrel; heating oil was 11 cents lower to 6 cents higher, with June at 51.34 cents a gallon, and unleaded gasoline was 0.20 cent to 1.49 cents higher, with June at 63.97 cents a gallon.
