Dow Sags 22, But NASDAQ Soars : Market Overview
- Blue chip stocks closed lower after a year-end rally stalled on a late bout of computerized program selling. But small stocks finished at record highs.
- Bond yields fell in thin trading, while lumber futures zoomed to a 13-year high on renewed timber supply worries.
Stocks
The market posted another mixed session, which analysts said was typical of confused year-end trading.
The Dow Jones industrials lost 22.42 points to 3,310.84 after being up as much as 20 points at midday.
But advancing issues outnumbered declines by about 6 to 5 on the New York Stock Exchange, where volume was surprisingly strong at 227 million shares, up from 143.97 million Monday.
More important to trend watchers, the NASDAQ composite index rose to a new record, adding 2.76 points to finish at 669.01. That topped the previous high of 667.12 on Dec. 8 and added further credibility to the small-stock rally that has paced the broad market since late summer.
Traders said late program selling hit a few blue chips hardest, including Dow stocks IBM, off 2 to 49 3/4; Goodyear, off 1 3/4 to 67 5/8, and 3M Co., down 2 3/4 to 100 1/8.
Favorable economic news may have helped power the small-stock rally, analysts said. The Conference Board, an independent business research organization, reported that its index of consumer confidence jumped sharply this month, while another report showed November sales of existing homes at the highest level in nearly six years.
Among the market highlights:
- Retail stocks were mostly higher. But an early rally faded somewhat after Wall Street’s Johnson Redbook Service reported Christmas season retail sales figures that it characterized as a “bonanza not equaled since 1983.”
Some investors apparently fear that the Johnson Redbook numbers might signal an unsustainable burst of demand rather than a lasting improvement.
Among big gainers, Federated Department Stores rose 7/8 to 19 7/8, Ross Stores leaped 1 3/8 to 19 7/8, Bed, Bath & Beyond zoomed 2 to 36 1/2, Tiffany soared 3 5/8 to 33 1/8, and May Department Stores was up 1 1/2 to 71 1/2.
- Outside the Dow, many industrial issues continued to climb on the improving economic outlook. PPG Industries rose 1 1/2 to 64 7/8, ITT jumped 1 5/8 to 71 1/2, USX-U.S. Steel gained 1 1/4 to 33 5/8, Nucor added 1 3/4 to 77, and Deere rose 1 1/4 to 43 1/4.
- GM fell 5/8 to 32 1/2, while Chrysler closed unchanged at 32 3/4. It marked the first time in five years that Chrysler’s stock price topped GM’s. Chrysler is riding high on the success of its new car lines.
- Among drug issues, Bristol-Myers Squibb climbed 3/4 to 68 1/2. The company’s drug, Taxol, for treatment of advanced ovarian cancer, received final approval from the Food and Drug Administration. Also, Glaxo jumped 1 1/8 to 23 3/8. The FDA approved Glaxo’s drug, sumatriptan, for the treatment of migraine headaches.
- NASDAQ issues helping to lead that market to a record close included PacifiCare Health, up 1 5/8 to 48 3/4; coffee retailer Starbucks, up 1 1/8 to 36; Viking Office Products, up 1 1/8 to 24 7/8, and DEP Corp. Class B, up 7/8 to 14 1/8.
But recent new-issue Snapple Beverage tumbled 3 to 35 1/2 in profit taking.
Overseas, London shares surged in the last hour of trading on the back of gains on Wall Street. The Financial Times-100 index jumped 20.3 points to a record 2,847.8.
In Frankfurt, the DAX index lost 2.38 points to 1,542.23.
Credit/Currency
Treasury bond yields eased, prompted by technical factors and optimism that an improving economy will make it easier for President-elect Bill Clinton to begin paring the federal budget deficit.
The yield on the Treasury’s 30-year bond fell to 7.36% from 7.40% Monday, and shorter-term yields also dropped. Trading continued light, and some of the buying represented “short covering” by traders who had expected interest rates to be rising by year’s end.
The federal funds rate, the interest on overnight loans between banks, was 2%, down from 3.375% Monday. The rate tends to fluctuate on Wednesdays for technical reasons related to banks’ balancing of their books.
In currency markets, the dollar drifted lower in lethargic trading, with many traders already having closed their books on the year.
In New York, a dollar bought 124.73 Japanese yen, down from 124.93 Monday. It also eased to 1.614 German marks from 1.619.
Commodities
Lumber futures prices soared to a 13-year high Tuesday on the Chicago Mercantile Exchange amid reports of constricted supplies and rising home sales.
Spruce two-by-fours for January delivery surged $5, the permitted daily limit, to $277.20 per 1,000 board feet. It was the highest settlement for near-term deliveries since August, 1979, when lumber futures hit a record high of $287.30.
Lumber prices have risen sharply in recent months, reflecting signs of a strengthening economy and sharply reduced logging on federal timberland in the Northwest because of efforts to protect the habitat of the threatened northern spotted owl.
Traders also said retailers continue to rebuild lumber stocks depleted by 1992 catastrophes, topped by Hurricane Andrew.
Elsewhere, January platinum sank $3.10 to $356 an ounce on the New York Mercantile Exchange. On New York’s Commodity Exchange, near-term gold futures fell 40 cents to $332.50 an ounce, while silver lost 2.3 cents to $3.65.
In the oil markets, light sweet crude for February settled at $19.64 per barrel, down 18 cents at the New York Merc.
On the New York Cotton Exchange, frozen concentrated orange juice futures ended sharply weaker as prospects of damaging cold weather in Florida’s Citrus Belt diminished. Juice for March slid 4.15 cents to 88.45 cents a pound.
Market Roundup, D6
