FINANCIAL MARKETS : Technology Stocks Pace Nasdaq Gain; Bonds Steady
Market Overview * Buoyed by gains in technology stocks, the Nasdaq index posted its fourth record closing in a row Tuesday, while blue-chip shares eased on profit taking.
* In the government bond market, the main 30-year bond yield held steady, although prices rose modestly.
* The dollar fell against the yen and most other currencies, and gold prices rose.
Stocks
Most stocks traded in a narrow range, with little news to affect the overall market, traders said.
After soaring more than 24 points Monday, the Dow Jones industrial average lost 1.68 to close at 3,566.02 on Big Board volume of 243.36 million shares. Advancing issues outnumbered declines by about 7 to 6 on the New York Stock Exchange.
The Nasdaq index rose 3.71 to 763.66, a new high. The index is dominated by technology stocks, which have performed well recently.
Much of the activity on the Nasdaq market came ahead of the third quarter’s end on Thursday, which has added urgency to the buying. said Ricky Harrington, senior vice president at Interstate/Johnson Lane. That also supported stocks on other markets.
“Technology stocks have been strong recently and institutions like to have stocks that have been performing well in their portfolios at the end of the quarter,” Harrington said.
In addition, the sluggish behavior of the economy has helped spur buying in small-company stocks, analysts said.
“Investors are worried about third-quarter earnings, and they think growth can be found in small companies,” said David Shulman, a market strategist at Salomon Bros.
Many investors believe small companies can do better than larger, less flexible companies in a slow-growth environment, Shulman, said.
Adding to the NYSE’s lethargy was the bond market. Stock investors have often taken their cue from bonds because low interest rates make stocks more appealing.
Mostly, there was a certain amount of selling shares that ran up on Monday, Harrington said.
Stocks ended higher abroad. London’s Financial Times 100-share average added 10.6 points in Frankfurt, the DAX-30 share average closed up 1.43 points. Tokyo’s 225-share Nikkei average gained 78.61 points.
Among the market highlights:
* Barnes & Noble headed the Big Board volume list in their initial public offering, ending at 29 3/8 after being priced at 20.
* Spectrum Information rose 1-1/16 to 6 after it received a patent for technology connecting portable computers to cellular telephones.
* Among strong technology shares, Microsoft added 1 3/4 to 84 and Intel Corp. rose 2 3/8 to 72 3/4. Cypress Semiconductor added 2 1/8 to 15 1/8. Alex. Brown raised its rating to buy from neutral.
* Warner-Lambert fell 1 1/4 to 66 1/2. It expects third-quarter results will be down from the year-ago period and full-year results to be flat. Drug stocks that eased included Pfizer, off 7/8 to 60, and Merck, down 3/8 to 30 7/8.
* Synoptics was among the most actively traded Nasdaq issues, rising 1 to 25 1/4. The company unveiled new products to build structured networks.
Credit
A price rally that was spurred Monday by news the Federal Reserve had taken a neutral stance toward interest rates continued for part of the day after strong buying for the long bond in Tokyo.
But most of that activity was concentrated among a few players, analysts said, and it didn’t last through the afternoon.
The 30-year bond yield ended the day holding steady at 5.94%, while its price, which moves in the opposite direction, added 3/32 point, or about 94 cents per $1,000 in face value.
The Conference Board reported its consumer confidence index was 62.6 this month, up 3 points from August but still at a depressed level from earlier in the year.
The federal funds rate, the interest on overnight loans between banks, was 3.063%, down from 3.188% late Monday. The rate has been in this range for months.
The federal funds rate, the interest on overnight loans between banks, was 3.063%, down from 3.188% late Monday. The rate has been in this range for months.
Other Markets
Currency traders said the markets were disappointed that no new initiatives on cutting the U.S. trade deficit emerged from a meeting Monday between President Clinton and Japan’s prime minister, Morihiro Hosokawa.
The yen has climbed about 15% against the dollar this year, in part on the perception that the U.S. government wanted a stronger yen to help close the trade gap. A stronger yen makes Japanese exports more expensive, and imports to that country cheaper.
In New York, the dollar finished at 104.90 Japanese yen, down from 106.05. Adding to the market’s disappointment was a report saying that U.S. Secretary of State Warren Christopher told Hosokawa that the U.S. government was not satisfied with the measures Japan has taken thus far, traders said.
The dollar also fell against the German mark, closing at 1.623 marks, down from 1.629 on Monday, as worry about political upheaval in Russia abated.
Meanwhile, in commodities trading, copper futures prices tumbled to the lowest level in nearly six years Tuesday as traders confronted weak demand that had been largely ignored during a recent supply squeeze.
Copper for October delivery sank 2.3 cents on New York’s Commodity Exchange to 75.60 cents a pound, the lowest price for near-term deliveries since Oct. 20, 1987.
In precious metal trading on the Commodity Exchange, gold closed at $355.40 an ounce, up $1.70 from Monday and silver silver gained 3 cents to close at $4.075 an ounce.
Oil futures rose 23 cents to $17.96 a barrel on the New York Mercantile Exchange as OPEC oil ministers continued to work in Geneva toward a new agreement aimed at boosting prices.
Market Roundup, D8
