Profit Takers Move In, Put Dow Off 4.95
After two days of healthy buying, Wall Street traders took profits today, sending stocks mildly lower.
The Dow Jones industrial average closed down 4.95 points at 2,535.40. Volume on the New York Stock Exchange was a moderate 160.24 million shares, while advancing stocks outpaced losers by about 8 to 7.
Traders said sharply rising bond prices--a reflection of dealers’ hopes that the Federal Reserve will lower interest rates soon--stopped blue chip stocks from falling further.
Profit taking was the main reason for the Dow’s decline. In the previous two sessions, the 30-share index rose by a combined 96.54 points.
Throughout the day, the market had been fluctuating in a narrow range.
“My guess is it is the pause that refreshes,” said Michael Metz, an analyst with Oppenheimer & Co. “We’ve had a nice 100-point run in the last two sessions. I think we’re seeing a little profit-taking.”
Stocks posted their gains as oil prices dropped sharply, but oil was moving back up today, and some analysts believed that had put a brake on the stock market.
“It’s a little bit of a deterrent,” said Jack Solomon of Bear Stearns & Co. He said the market seemed to be “resting.”
Among actively traded issues, Philip Morris was down 5/8 at 48 3/4 with an hour before the closing, Federal National Mortgage was up 3/4 at 32 3/4, American Express was up 7/8 at 22 1/2, IBM was down 1/2 at 112 1/2, General Electric was up 1/2 at 55 7/8 and Pepsi Co. was up 3/8 at 25 3/8. Toys R Us was up 7/8 at 23 5/8.
On the government bond market, long-term issues posted the steepest gains as the market positioned itself for lower interest rates amid more negative news about the economy.
The price of the government’s bellwether 30-year bond, which climbed 29/32 point on Friday, was up another 3/4 point, or about $7.50 per $1,000 in face value at midday. Its yield, which falls when the bond’s price rises, tumbled to 8.55% from 8.62% late Friday. The government bond market was closed Monday for Veterans Day.
Bond prices moved higher on the opening, building on gains posted overseas on Monday.
