FINANCIAL MARKETS : Profit Taking Finally Ends Dow Climb
Market Overview * Blue-chip stocks suffered their first setback of the new year Tuesday, as profit taking broke the market’s string of seven consecutive sessions of higher closes.
Mexico City’s Bolsa index rebounded from Monday’s plunge. But many Asian markets suffered another round of deep profit taking, which continued early today.
* Treasury bond yields dipped amid optimism that upcoming government data will show that inflation remained in check last month.
Stocks
The Dow Jones industrial average eased 15.20 points to 3,850.31, leading the broad market lower.
Tuesday’s slight decline ended four straight all-time highs on the Dow as well as record closes Monday for broader indexes.
But the market was stronger than the Dow would suggest, some analysts said. Losing issues outnumbered winners by just 11 to 10 on the Big Board and by a smaller margin on Nasdaq.
“We’ve had close to a moonshot rally in blue-chips, particularly in autos,” said Robert Stovall, president of Stovall/Twenty-First Advisers in New York. “The big surprise is it took until the seventh trading day of the new year for the market to show a little profit taking. I think it’s very impressive.”
Many Asian markets, meanwhile, were hit much harder by profit taking than were U.S. shares. In Hong Kong, the Hang Seng index dove 211.13 points to 11,155.81. The selloff continued early today, with the index down 416 points near midday.
Singapore’s chief stock index, down 3% on Tuesday, was off another 5% early today. And in Malaysia, the Kuala Lumpur stock exchange index, down 5.8% on Monday, slumped another 7.2% early today.
In Mexico City, however, stocks recovered somewhat from Monday’s slide in the wake of civil unrest. The Bolsa index gained 95.45 points, or 3.9%, to 2,554.56.
Among U.S. market highlights:
* Fourth-quarter earnings reports from two large industrial firms weren’t well received. Alcoa reported a quarterly loss. Though expected, its shares fell 2 1/2 to 71 5/8. International Paper was off 3/4 to 72 7/8 after saying fourth-quarter operating earnings rose 15%.
But many industrial issues continued to advance, led again by the autos. GM gained 1/4 to 59 1/2, Chrysler surged 7/8 to 59 5/8 and Ford rose 1 to 68 1/4.
Other winners included Cincinnati Milacron, up 1 to 23 1/8; Parker Hannifin, up 5/8 to 39, and PPG Industries, up 5/8 to 77.
* Oil-related stocks fell amid new pessimism about OPEC’s willingness to rein in production. Schlumberger fell 1 3/8 to 59 1/2, Chevron lost 1 to 90 3/4, Halliburton dropped 1 1/2 to 32 and Enron Oil & Gas sank 1 1/8 to 44.
* Hilton Hotels leaped 2 5/8 to 63 1/2 after saying that fourth-quarter earnings should be up 20%, despite a onetime charge.
* Biogen surged 5 to 46 1/4 after the biotech firm said it is concluding clinical trials for its multiple sclerosis drug a year ahead of schedule, which could speed federal approval of the drug.
Elsewhere in foreign trading, London’s FTSE-100 index lost 26.8 points to 3,413.8. In Frankfurt, the DAX average ended down 5.04 points at 2,228.75.
In Tokyo, the Nikkei average closed at 18,485.25, up 41.81 points.
Other Markets
The Treasury’s key 30-year bond yield eased to 6.23% from 6.24% on Monday, as interest rates marked time ahead of inflation reports for December.
Bond traders said they expected news of low inflation today and Thursday, following last week’s report of modest jobs growth. On Friday, the Labor Department reported a smaller than expected gain in non-farm payrolls in December.
Investors in fixed-income securities welcome news of low inflation because higher prices in the economy can diminish the value of their holdings.
In other markets:
* Gold for current delivery gained $3 to close at $388.00 an ounce on the New York Comex. Silver closed at $5.11, up 7.4 cents.
* Forecasts for a frigid weekend in the Midwest and Northeast helped push light, sweet crude oil prices up 18 cents to $14.85 a barrel on the New York Merc, after Monday’s 65-cents-a-barrel dive.
* The dollar edged slightly higher in an extremely quiet session.
