Airline Stocks Rocket; Broad Market Is Mixed : Market Overview
Wall Street closed mixed, but the market’s tone improved significantly from Monday and Tuesday. Airline stocks surged on better earnings expectations.
* Bond yields were mostly flat, while the dollar got a big lift as the Bank of Japan intervened to boost the currency from record low levels against the yen.
Stocks
The Dow industrials traded in a narrow range most of the day as the market tried to regain its footing, following a bout of profit taking Monday and Tuesday.
The blue chip Dow slipped 4.05 points to 3,439.44, and losers narrowly beat gainers on the Big Board. But smaller stocks mostly closed higher.
The hot action was in airline issues: News that American Airlines’ parent, AMR Corp., posted a much smaller than expected first-quarter loss sent that stock soaring 6 to 71 1/4 and lifted other airline issues as well.
Still, analysts said the market’s major concern was a growing uneasiness about events in Washington, where Republicans on Wednesday sank President Clinton’s economic-stimulus plan.
While many Wall Streeters were opposed to Clinton’s measures anyway, there remains an undercurrent of worry about the potential for renewed political gridlock at a time of economic weakness.
Among the market highlights:
* Among other airlines, United parent UAL jumped 9 5/8 to 149 5/8, Delta leaped 2 7/8 to 59 3/8 and Alaska gained 1 1/8 to 17 1/8. Investors are betting that AMR’s shrinking losses mean the industry overall could soon return to profitability.
* Many industrial issues renewed their recent rally. Georgia-Pacific added 5/8 to 68 5/8, Snap-On Tools rose 1 1/4 to 34 3/4, USX-U.S. Steel gained 3/4 to 42 1/2, Manitowoc advanced 1 to 30 3/4 and 3M Co. lifted 1 1/4 to 114 1/4.
* Retailers also snapped back from their setback of the last few days, when sellers targeted the stocks on fears of slowing consumer spending. Sears zoomed 1 3/4 to 54 7/8, Penney shot up 1 7/8 to 83 3/4, Woolworth rose 1 1/4 to 30 5/8, Circuit City jumped 1 3/8 to 30 1/2 and Gap soared 1 3/8 to 29 5/8.
* On the downside, bank stocks continued to fall despite mostly stellar first-quarter earnings reports. NationsBank dropped 1 5/8 to 50 3/4, BankAmerica lost 1 1/8 to 49 1/8, Citicorp gave up 3/4 to 28 and Mellon sank 2 to 57 3/4.
* Utility stocks also continued to give ground. Commonwealth Edison lost 7/8 to 28 1/8, Houston Industries fell 5/8 to 46 7/8 and Panhandle Eastern sank 1/2 to 21 3/4.
* Technology stocks were mixed. Compaq slumped 1 7/8 to 49 1/4 despite a stellar earnings report. Other losers included Sun Microsystems, down 1 3/4 to 26 1/4, and Microsoft, down 1 7/8 to 84 7/8.
But Adobe Systems leaped 2 3/4 to 46 1/2, Picturetel soared 2 to 17 1/2 and Sybase jumped 2 3/4 to 55 1/4.
* Among stocks responding to poor earnings reports, Jostens, which makes class rings and yearbooks, plummeted 7 1/8 to 19 after posting lower earnings and forecasting disappointing results for the year.
Overseas, stocks were mostly weak. Frankfurt’s DAX average slid 20.24 points to 1,666.87, while London’s FTSE-100 index added 13.5 points to 2,869.6.
In Tokyo, the Nikkei index eased 55.42 points to 19,773.01.
Credit
The Federal Reserve gave a slight lift to an otherwise lethargic Treasury market by buying government notes, possibly for another central bank.
The purchase created more demand in a lightly traded market that for the past week has been vainly searching for factors to push bond yields out of their current narrow trading range.
At the close, the yield on the bellwether 30-year T-bond was 6.74%, down from 6.75% Tuesday.
The Fed usually does not release information about its purchases and sales of securities, but one senior trader speculated that the Fed may have bought the notes for the Bank of Japan--which has been seeking to reinvest dollars purchased in trying to defend the U.S. currency from the surging yen.
Other Markets
The dollar’s free fall against the yen was interrupted, as the Bank of Japan intervened aggressively when the U.S. currency fell below 110 yen.
By the close in New York, the dollar had advanced to 110.71 yen, up from 109.97 overnight in Tokyo. Early today in Tokyo, the dollar was trading at 111.35 yen.
The dollar also gained against the German mark, rising to 1.600 marks in New York from 1.597 on Tuesday.
Elsewhere, gold slipped in New York after sharper declines overseas. On the Comex, gold for current delivery fell 40 cents an ounce to $339.50; silver fell 2 cents to $3.90.
On the New York Merc, light, sweet crude oil for June delivery rose 5 cents, to $20.37 a barrel.
Market Roundup, D8
