Dow Takes a Break From 11-Day Rally : Market Overview
Highlights of Monday’s market activity, compiled from Times staff and wire reports:
* Blue chip stocks ended slightly lower after 11 straight gaining sessions. Smaller stocks rose.
* Bond yields eased, while the dollar fell sharply against other major currencies as traders theorized that American and Japanese officials would agree to push the U.S. currency lower, to further reduce the U.S. trade deficit.
Stocks
The Dow Jones industrial average, which had set records in the past six straight sessions, slipped 1.35 points to 3,200.13.
Nonetheless, traders said the general mood remained optimistic. In the broader market, gaining issues outnumbered losers by more than 5 to 4 on the New York Stock Exchange. Big Board volume jumped to 251.21 million shares from 224.27 million Friday.
Smaller stocks showed strength as well: The NASDAQ composite index surged 5.25 points to close at 597.90, its seventh straight record.
“The market spent the day catching its breath,” said Robert Walberg, analyst at MMS International. “But they had a hard time selling it.”
Noting that the Dow is stalling at 3,200, Walberg said a 2% to 3% pullback is likely soon. “You need a couple of days on the downside,” agreed analyst John Brooks of Davis, Mendel & Regenstein.
Among the market highlights:
* Many industrial stocks that would benefit from a revived economy rose sharply. GM gained 1 to 33 1/2, Cummins Engine rose 1 5/8 to 55 1/2, Westinghouse Electric leaped 1 5/8 to 19 3/4, and Illinois Tool Works added 1 to 66 7/8.
* Airlines, another potential beneficiary of renewed economic growth, roared ahead. AMR, parent of American, reported stronger-than-expected December traffic. AMR rose 1 1/4 to 72 7/8, a new 52-week high. UAL, parent of United Airlines, gained 3 3/4 to 149, and USAir jumped 1 1/8 to 13 3/8.
* Medical stocks were active. Winners included drug firm Alza, up 3 1/4 to 52 5/8, and biotech firm Genzyme, up 2 1/8 to 60 1/8.
Among Southland issues, radiopharmaceuticals firm Syncor International jumped 1 3/4 to 28 1/4, a new all-time high. Hospital firm National Medical Enterprises, which reported flat quarterly profits, added 1 1/8 to 17 1/8. Meanwhile, medical-equipment maker Sunrise Medical plunged 7 to 29 1/4. It reported late Friday that the recent quarter’s profits would be below analysts’ expectations.
* Oil stocks sank. Schlumberger lost 2 5/8 to 60 3/4, Amoco slid 1 3/8 to 49 1/2, and Halliburton dropped 1 3/4 to 28.
* Helene Curtis fell 2 1/8 to 37 3/8 after the hair-care company reported third-quarter results slightly below analysts’ estimates.
Overseas, stocks rose in Tokyo on the first day back from the New Year’s holiday. The 225-share Nikkei average rocketed 817.41 points at 23,801.18, taking fuel from Wall Street’s recent rally.
But in London, the Financial Times 100-share average lost 10.9 points to 2,493.2. In Frankfurt, the DAX index eased 0.30 points to 1,603.32.
Credit
Interest rates renewed their decline. The price of the Treasury’s bellwether 30-year bond rose 5/8 point, or $6.25 per $1,000 in face amount, at closing. Its yield fell to 7.43% from 7.47% Friday.
For several weeks, economists have debated ways to lower long-term bond yields, which have not fallen in line with the Federal Reserve’s steady reduction in short-term interest rates.
Monday, speculation increased that the Treasury will soon shift more of its borrowing to short-term securities and away from long-term maturities. If that happens, existing long-term securities would grow more scarce, which could pull down their yields.
Meanwhile, the federal funds rate, the rate on overnight loans between banks, rose to 3.50% from 3.25% Friday.
Currency
The dollar’s latest slide began in Tokyo, where traders Monday bid the U.S. currency down after an unidentified Finance Ministry official said Japan could accept the dollar falling below 124 yen.
The dollar slumped further on speculation that President Bush and Japanese officials meeting today would agree to allow the dollar to fall further versus the yen.
In New York, the dollar dropped to 123.40 yen from 124.65 Friday. The U.S. currency also tumbled in value against the German mark, falling to 1.518 marks in New York from Friday’s 1.544.
Commodities
Oil futures closed lower in volatile trading on the New York Mercantile Exchange.
Profit taking set in after crude oil futures showed a 22-cent gain in early trading. The gain was tied to news that two Shell North Sea oil platforms had been shut.
Light, sweet crude for February ended down 2 cents at $19.21 a barrel.
Meanwhile, precious metals prices eased on New York’s Comex, with gold for February delivery closing down $1.20 to $350.30 an ounce; March silver was down 0.40 cent to $3.96.
Market Roundup, D8
