Dow Slips 4.6; Dollar Mixed as Calm Returns Market Overview : Market Overview
* The stock market caught its breath after last week’s rally into record territory. The Dow industrials, up 132.11 points last week, slipped 4.60 points to 3,437.54.
* Bond yields rose as investors prepared for a huge new U.S. debt refinancing this week.
* The dollar finished mixed in a quiet session as calm returned to the market after last week’s surprise German interest rate cut.
Stocks
Profit takers ruled the day after last week’s stunning rally, but the selling was weak, and most major indexes closed with small losses.
Declining issues beat advancers by just 950 to 939 on the New York Stock Exchange. Volume tumbled to 243.4 million shares from 324.7 million Friday.
Analysts said confidence continues to increase about the strength and durability of the economy’s recovery. So even though buyers stepped away from the market Monday, pent-up demand for stocks still is believed to be huge.
Among the market highlights:
* Investors’ belief in a strong economic recovery was reflected in continuing gains for many industrial issues. Wheeling-Pittsburgh surged 2 to 9 1/2, Owens-Corning rose 1 1/2 to 43 3/4, Bearings Inc. added 1/2 to 21 5/8, Phelps Dodge gained 1 1/4 to 55 1/8, Dow Chemical was up 1 1/8 to 58 3/4 and GM leaped 1 to 38 7/8.
GM, which is due to issue its year-end earnings report this week, said Friday that it had a “very strong” fourth quarter.
* Also among industrials, Eastman Kodak rocketed 2 3/8 to 53 3/8. The company is set to name a new head of its consumer film unit, and Wall Street is hoping the firm will tap an aggressive individual from outside the company.
* Energy stocks continued their steady advnce. Chevron rose 1 to 76, Amoco gained 3/4 to 54 5/8, Exxon added 1 to 62 7/8 and Mobil was up 7/8 to 65 7/8.
* On the downside, profit takers slammed many of the stocks that have run up fastest in recent months. Casualties included Circus Circus, off 2 1/8 to 51 1/8; Marvel Entertainment, down 2 3/8 to 22 1/4; CNA Financial, off 3 1/8 to 97 1/8, and Nike, which lost 3 1/8 to 81 7/8. Nike was hurt by rumors that its European sales are slowing.
* Biotech issues also were ripped again. Amgen slumped 4 1/8 to 49 3/4 after having tumbled 8 1/8 last week. Some analysts see the company’s earnings growth slowing. Other biotech losers included Biogen, off 4 5/8 to 32 1/8; Synergen, down 3 to 48 1/4, and Immunex, off 2 1/4 to 43.
* Microsoft fell 3 1/4 to 85 1/4 as concerns lingered about possible Federal Trade Commission antitrust action against it. The FTC delayed a decision Friday.
* Pet Inc. fell 1 7/8 to 16 1/8 on word that Pepsico plans to market packaged Mexican-style foods under its Taco Bell name in grocery stores, in competition with Pet’s Old El Paso line. Pepsico eased 1/8 to 40 3/8.
* Fibreboard leaped 2 5/8 to 11 1/8. Its insurance carrier said it will try to settle a lawsuit critical to the future of the wood-products firm.
* Among Southland issues, auctioneer Kennedy-Wilson plunged 5/8 to 3. The firm reported a fourth-quarter loss of 11 cents a share. Its chief financial officer recently quit, the second CFO to depart the company in several months.
* Republic Pictures rose 1 to 10 1/4. Stephen Wynn, head of Mirage Resorts, last week disclosed that he has a 9.5% stake in Republic. The stake is solely an investment, Wynn said.
Overseas, London’s FTSE-100 index added 7.1 points to 2,870, while Frankfurt’s DAX index gained 5.79 points to 1,647.16, the highest close since July 23.
In Tokyo, the Nikkei average fell 51.17 points to 17,281.73.
In Mexico City, the Bolsa index fell 19.27 points to 1,640.42.
Credit
Treasury bond yields were higher across the board in light trading, as investors took profits ahead of this week’s auction of $35.5 billion in new Treasury securities.
The yield on the Treasury’s 30-year bond rose to 7.19% from 7.16% Friday.
Interest rates have plunged in recent weeks on optimism about low inflation and about President Clinton’s plan to cut the federal budget deficit.
But this week, the market must absorb a slew of new bonds, as the Treasury conducts its quarterly refinancing. The government will sell $15.5 billion in three-year notes today, $10.75 billion in 10-year notes Wednesday and $9.25 billion in 30-year bonds Thursday.
The fed funds rate, the rate on overnight loans between banks, was 2.94%, up from 2.88% Friday.
Currency
The dollar turned in a mixed performance on world currency markets Monday, but the underlying tone remained bullish.
The stage appeared set for a higher dollar following last week’s interest rate cut by Germany’s central bank. Lower rates abroad make yields on U.S. securities more attractive in comparison.
But the dollar came under some pressure Monday as traders cashed in on the currency’s recent run-up.
In New York, the dollar settled at 1.656 German marks, down from 1.659 Friday. The dollar also eased to 123.73 Japanese yen from 124.45.
Commodities
Cattle futures prices jumped to a 22-month high Monday, driven by stormy forecasts for the Great Plains and unabated meatpacker demand for reduced supplies of slaughter-ready animals.
Elsewhere, light, sweet crude oil for March settled at $20.08 a barrel, down 13 cents on the New York Merc.
On the Comex, gold for February rose 20 cents to $328.90 an ounce; March silver rose 0.7 cent to $3.67.
