Stocks Pull Back After Two-Day Rally; Dow Off 5.94 on Profit Worries : Market Overview
* The stock market slipped in an erratic session, driven down by a late wave of computerized selling and weakness in IBM Corp.
* Long-term Treasury bond yields fell after Federal Reserve Chairman Greenspan said the world was entering a period of price stability.
Stocks
The Dow Jones industrial average, up 64.84 points Monday and Tuesday, slipped 5.94 to 3,195.48.
Losing issues topped advances by about 9 to 8 on the Big Board, on volume of 175.90 million shares.
Traders said the market was pulled lower by a drop in IBM, apparently fueled by jitters ahead of its third-quarter earnings report expected today. IBM fell 3/4 to 78 after trading as low as 76 3/4.
Analyst Richard Meyer at Ladenburg Thalmann said that when IBM “started to become unglued,” the rest of the market followed.
Though many other corporate earnings reports of recent days have been encouraging, “I think the market got a little ahead of itself,” said Robert Walberg, an analyst at MMS International, referring to the Dow’s two-day rally.
Among Wednesday’s highlights:
* Well-received earnings included those from Coca-Cola, up 5/8 to 38 1/2; Pfizer, up 1 7/8 to 73 1/2; pen-maker BIC, up 2 3/8 to 47 5/8; Gannett, up 1 1/8 to 48, and Ryan’s Family Steakhouses, up 3/4 to 9 7/8.
* On the downside, weak earnings results from many industrial companies knocked their shares lower. International Paper lost 1 3/4 to 61 1/8, Reynolds Metals sank 2 to 49, Potlach eased 1/2 to 44 1/4, and Snap-On Tools lost 3/4 to 29 1/8.
* Some consumer stocks also disappointed. Springs Industries tumbled 5 1/8 to 32 7/8. The fabrics company said it expects fourth-quarter earnings to be flat.
Elsewhere, Gerber Products fell 2 to 35 after projecting lower quarterly results, citing slower baby-food business. Another food giant, Archer Daniels Midland, lost 1 to 25 after reporting flat results.
* Recently depressed U.S. Surgical jumped 8 1/8 to 64 5/8 after unveiling a host of new products.
Overseas, Tokyo’s Nikkei average lost 146.64 points to 17,344.03. London’s Financial Times 100 index eased 10.0 points to 2,574.7, while Frankfurt’s DAX index slipped 6.97 points to 1,458.53.
Credit
Dissipating hopes for another Federal Reserve rate cut bumped short-term interest rates higher, but the Treasury’s 30-year bond yield fell to 7.49% from 7.53% Tuesday on upbeat inflation comments from Fed chief Greenspan.
In Tokyo, Greenspan said in a speech that the world economy is approaching price stability, a point where inflation no longer influences decisions of businesses and consumers.
The comments were well-received by long-term bond investors because inflation is the No. 1 enemy of such bonds.
The fed funds rate, the rate on overnight loans among banks, rose to 4.50% from 3.75% Tuesday, but the rise was for technical reasons.
Other Markets
The dollar was stable, closing in New York at 121.02 Japanese yen versus 121.10 Tuesday and 1.461 German marks versus 1.464.
On New York’s Comex, October gold futures fell $1.20 to $342.80 an ounce; December silver fell 0.8 cent to $3.71.
On the New York Merc, light, sweet crude oil slipped 1 cent to $22.08 a barrel.
