FINANCIAL MARKETS : STOCKS : Profit Taking Halts Rally; Dow Loses 20.30
Stocks were mixed Thursday as some investors switched into a profit-taking gear after this week’s fast-track rally.
The Dow Jones industrial average fell 20.30, or 0.7%, to 2,810.64. New York Stock Exchange volume continued heavy at 292.2 million shares, compared to 276.9 million Wednesday.
Still, advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 849 up, 837 down and 377 unchanged.
Smaller stocks were hit harder, but that was expected because they have far outperformed the blue chip Dow since October. The NASDAQ over-the-counter index snapped an 11-day winning streak, falling 4.23, or 1%, to 435.01.
Alan Newman, analyst at HD Brous & Co., estimated that $50 billion had been poured into stocks during the past three weeks. “Short term, that’s an awful lot of money. . . . The market needs time to digest this move. Investors will then have a chance to sit back and act rationally,” he said.
Among the market highlights:
* Big losers in the Dow included Coca-Cola, down 2 to 49 1/2; Merck, off 2 to 95 1/2; Westinghouse, down 1 1/4 to 27 1/8, and IBM, off 1 3/8 to 128 1/2.
* Heavy-industry stocks were mostly lower, but some continued to advance, showing that investors are still betting that the recession will end before long. GM rose 1/2 to 35 7/8, Eaton gained 1 3/8 to 58 and Inland Steel added 5/8 to 24 1/2.
* Biotech stocks cooled off from their recent hot streak. Amgen lost 2 7/8 to 80 1/8, Immunex lost 3 1/2 to 39 3/4, Genzyme fell 2 5/8 to 32 3/4 and Xoma dropped 1 7/8 to 22 3/4.
Other tech stocks also fell. AST Research eased 2 1/4 to 45, Logicon lost 1 1/4 to 19 1/4, Datron Systems gave up 7/8 to 9 1/8 and Microsoft was down 2 3/4 to 103.
* Oil stocks, which came late to the winter rally, were broadly higher. Arco gained 3 1/4 to 129 1/2, Mobil was up 1 to 60 and Oceaneering rose 1 1/8 to 11 7/8.
In London, shares surged in late afternoon. The Financial Times 100-share average closed at 2,243.7, up 48.9, or 2.2%. In Frankfurt, an early rally faded and the 30-share DAX index ended 7.57 points higher at 1,436.26.
Tokyo stocks closed firmer for the fourth straight day. The Nikkei index rose 152.39 to 24,104.43. Early today the Nikkei rose another 222.08 points.
Credit
Bond prices declined after the final stage of the government’s quarterly refunding auction produced sluggish demands for long-term bonds.
While new 30-year Treasury bonds were auctioned at an average yield of 7.98%, the existing 30-year bond fell 21/32 point, or about $6.50 per $1,000 in face amount. Its yield rose to 8.06% from 8% late Wednesday.
The decline erased gains Wednesday on enthusiasm over the successful sale of 10-year T-notes by the government.
The federal funds rate, the rate on overnight loans between banks, was quoted at 6.25%, up from 3% Wednesday. Traders said the low level in the previous session was the result of technical factors.
Currency
The dollar edged higher for the first time in more than a week after two central banks intervened to shore up the U.S. currency.
The dollar’s slight domestic rise helped it recover somewhat from a postwar low hit Wednesday against the German mark. However, traders said belief that the Federal Reserve will move to lower U.S. interest rates further threatened to push the dollar to new lows in coming sessions.
By late in the day in New York, the dollar stood at 1.455 German marks, up from 1.448 Wednesday. The British pound fell to $2.000 from Wednesday’s $2.003. The Japanese yen rose to 128.52, up from 128.13.
Commodities
Prices of soybean futures fell sharply on the Chicago Board of Trade, reflecting anticipation of a bearish government report next week and persistent weakness in the wheat and corn markets.
Soybean futures prices settled 4.75 to 6.75 cents lower, with the contract for delivery in March at $5.662 a bushel.
Oil prices fell on the New York Mercantile Exchange, erasing early gains after a rally driven by the price of heating oil faded on forecasts of warmer weather in Europe.
Light sweet crude oil settled 25 to 45 cents lower, with March at $21.22 a barrel, and heating oil was 0.83 cent to 1.7 cents lower, with March at 65.52 cents a gallon.
Gold settled $4.80 to $4.90 higher, with February at $367.80 an ounce; silver was 2.9 to 3.6 cents higher, with February at $3.80.
Market Roundup, D6
