Dow Sheds 14 on Inauguration Day : Market Overview
The stock market closed lower as Wall Street greeted the inauguration of Bill Clinton as the 42nd President of the United States with a modest selloff.
* Long-term yields ended mostly higher in quiet trading in the bond market.
Stocks
Blue chip stocks finished lower as the market listened in vain to President Clinton’s inaugural speech for clues to his strategy to cut the budget deficit.
The Dow Jones industrial average dropped 14.04 points to 3,241.95, while declining issues outnumbered advances by about 10 to 9 on the New York Stock Exchange. Volume on the Big Board slipped to 268.79 million shares from the previous session’s 289.40 million.
The NASDAQ composite index rose 0.62 to 697.43, just short of Monday’s record close of 698.13.
Analysts said they did not detect any new economic initiatives in President Clinton’s inaugural address. His inauguration ended George Bush’s presidency and 12 years of Republican control of the executive branch.
The rise in bond yields also hurt stocks, analysts said.
Earnings news also continued to provide direction for the market. Analysts said the slate of earnings so far appears encouraging, and with interest rates staying tame, stock prices seem set for more gains.
But the market has also risen considerably, and some of the positive news may already have been discounted.
A. C. Moore, an analyst at Argus Investment Management, said: “The only thing propping up the markets here are low rates, but that doesn’t prevent a correction. The markets are at a high level.”
Among the market highlights:
* Bank stocks fell prey to profit taking after Tuesday’s large gains. Wells Fargo lost 1 3/4 to 97 1/4; BankAmerica was down 2 to 51 3/8; Chemical Banking fell 1 1/4 to 40 3/8; First Interstate Bancorp lost 2 to 50, and Bank of Boston edged down 1/4 to 26 5/8. But Citicorp rose 1 3/8 to 25 7/8, continuing to rise after reporting unexpectedly strong fourth-quarter results.
* U.S. Surgical leaped 6 5/8 to 76 after reporting fourth-quarter results. Alex. Brown & Sons upgraded its rating.
* Shares of Allied Clinical dropped 4 7/8 to 21 5/8. The company issued a fourth-quarter earnings projection that disappointed investors.
* IBM fell further, off 1 3/4 to 46 5/8, following its fourth-quarter operating loss report Tuesday.
* Intel Corp. ended 2 1/8 lower at 112 5/8 on further profit taking.
* Among biotechnology stocks, Centocor Inc. rebounded 7/8 to 6 5/8 and Biogen Inc. ended up 1 3/8 to 41 5/8.
* Conner Peripherals, also among the volume leaders, jumped 3 to 23 1/4. Late Tuesday, the company posted sharply higher operating earnings for the fourth quarter, before a special charge.
* Pharmaceutical stocks, hit hard by selling of late on worries over the prospective shape of new health care proposals, staged a modest rally. Merck gained 1/2 to 41 1/4; Pfizer rose 2 1/2 to 63 1/2; Abbott Laboratories added 1/2 to 27 1/4; Eli Lilly was up 1/8 to 58 5/8, and Syntex gained 1/4 to 21 3/8.
* Exabyte, one of the most active stocks in the NASDAQ market, fell 2 3/8 to 14 5/8. The company reported earnings of 25 cents a share for the fourth quarter, down from 47 cents a share a year earlier.
Overseas, Japanese stocks ended sharply lower, with the 225-share Nikkei average falling 288.46 points, or 1.72%, to 16,510.18. In Frankfurt, the DAX 30-share average finished 3.95 points down at 1,574.88. London’s Financial Times 100-share average closed 11.1 points up at 2,748.7.
Credit
Prices opened higher and gained some strength around the hour of Clinton’s inauguration as President.
Bond prices fell in the afternoon, possibly as investors took advantage of the rise in prices, said Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc.
The yield on the Treasury’s main 30-year bond rose to 7.33% from 7.30% late Tuesday, while its price fell 9/32 point, or $2.81 per $1,000 in face amount. Bond prices and yields move in opposite directions.
Analysts said investors have been waiting for indications how the incoming Clinton Administration will tackle the nation’s economic problems.
Short-term maturities were mixed in the secondary market for Treasury securities, ranging from 2/32 point higher to 1/32 point lower, the Telerate Inc. financial information service reported. Intermediate maturities fell 4/32 point to 5/32 point.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The federal funds rate, the interest on overnight loans between banks, was quoted at 3%, down from 3.25% late Tuesday.
Currency
The dollar settled mostly lower in moderate trading on world currency markets.
The dollar declined in foreign trading and continued to lose ground against most currencies when trading shifted to domestic markets. Analysts said dealers were sidetracked by the inauguration.
“People want to consolidate their positions while they see what a new regime will bring,” said Randolph Donney, director of research at Pegasus Econometric Group in Hoboken, N.J.
In New York, the dollar fell to 124.63 Japanese yen, down from 125.50 yen on Tuesday. The dollar also fell to 1.604 German marks from the previous session’s 1.611 marks.
Separately, the British pound was hit hard following a report showing domestic retail sales fell 0.7% in December. Analysts had been anticipating an advance. The pound settled at $1.544, less expensive than Tuesday’s $1.547.
Commodities
Oil prices fell for the third straight day as brokers reacted to weekly industry supply figures and also tried to figure out how calm the Middle East situation would remain.
Light, sweet crude oil for delivery in February closed down 25 cents a barrel at $18.33 on the New York Mercantile Exchange.
Market Roundup, D6
