Dow Climbs 19.80, No Thanks to AT&T; News
Stock prices turned upward today, pulling out of a weeklong slump despite some unwelcome earnings news from American Telephone & Telegraph.
The Dow Jones average of 30 industrials climbed 19.80 to 2,862.13.
Advancing issues outnumbered declines by about 7 to 5 on the New York Stock Exchange, with 856 up, 587 down and 521 unchanged.
Big Board volume totaled 146.62 million shares, against 141.42 million in the previous session.
The NYSE’s composite index rose 1.40 to 193.87.
AT&T; stock came under pressure after the company said it expects its earnings for the second quarter to fall short of the 65 cents a share it earned in the April-June period last year.
AT&T; cited weaker-than-expected sales of some of its products, which it attributed to sluggish economic activity and market conditions.
The drop in AT&T; was widely felt, given its status as the nation’s most widely held stock, with more than 2.6 million share owners.
Analysts said, however, that buyers moved cautiously into some other stocks after it became evident that the AT&T; setback wasn’t starting a general rush to sell.
Bond prices moved in a narrow range in early trading today as investors took time to digest President Bush’s comments that he will consider increased tax revenues to reduce the budget deficit.
The Treasury’s key 30-year bond was unchanged after rising 17/32 point, or nearly $5.25 per $1,000 face amount, on Tuesday. Its yield held at 8.51%.
Shorter term securities were unchanged to up 1/16 point.
Analysts said the market was taking time to mull over Bush’s concession Tuesday that he must consider tax hikes to help control the growing deficit. Bonds rallied on the news, reflecting optimism that budget negotiations will progress, that the deficit may be reduced and that interest rates consequently will fall.
“I think the higher prices that you had seen earlier this morning were possibly just follow-through from yesterday,” said Elizabeth Reiners, a vice president at Dean Witter Reynolds Inc.
“We’ve digested Mr. Bush’s remarks regarding the budget deficit, how he proposes to negotiate in order to shrink that gap. (Although they are) not any real substantive remarks, he’s at least broken the logjam on the negotiating process,” she said.
Raymond Stone, managing director of Stone & McCarthy Associates of Princeton, N.J., said Bush’s comments were reinforced in a political-economic newsletter by the Washington-based group Smick-Medley International indicating that the Bush Administration is willing to put new tax measures on the negotiating table.
Analysts said the market seemed to ignore a government report indicating that the economy will avoid a recession this year. The Index of Leading Economic Indicators rose 0.8% in May, on the high end of analysts’ expectations. “It’s a hair bigger than expected, but not a shocking number,” Stone said. “I think the focus is more toward early July.” Government reports to be released then include June unemployment figures due July 6.