FINANCIAL MARKETS : Dow Dips, but Analysts Worry It Will Take a Bath
Market Overview
Blue-chip stocks closed slightly lower Monday as the market paused to catch its breath after its recent string of record closes.
* Long-term bond yields rose slightly as investors played it safe ahead of upcoming note auctions and economic reports.
Stocks
The Dow Jones industrial average finished down 1.69 points at 3,912.79. It was only its fourth losing session of 1994 and ended a run of five new highs in the previous six trading days. The indicator had risen nearly 20 points in early trading before falling back.
While that drop on paper appeared small, analysts said there were reasons to be concerned. A bigger drop was prevented only by gains in a handful of issues, while other market indicators were uniformly lower.
“Everybody has talked about how high the market is,” said Tom Gallagher, chief trader at Oppenheimer & Co. “It would not be unusual to see the market roll over and have a couple weeks or a couple months of a correction.”
On the New York Stock Exchange, declining issues outnumbered advancing ones by about 4 to 3. Big Board volume totaled 299.99 million shares, down from Friday’s 346.23 million.
The market seemed poised for a weak opening. Overseas, the Japanese stock market suffered a steep decline of almost 5%. Share prices finished narrowly lower in London, with the Financial Times 100-share average falling 2.8 points to 3,481.4.
In Frankfurt, the DAX-30 closed up 16.64 points at 2,090.58 after a floor close of 2,080.01.
Mexico City’s Bolsa index closed up 10.53 points at 2,693.71, surpassing its previous closing record of 2,684.17, set Jan. 6.
Among the market highlights
* IBM jumped 3 3/8 to 58 5/8 in anticipation that its fourth-quarter earnings report, to be released Tuesday, would show the computer giant’s first profit in more than a year.
* Caterpillar rose 1 5/8 to 100 1/4 on the heels of higher than expected earnings reported Friday. Chevron, another key Dow component, gained 1 to 92 5/8. Alcoa finished up 3/4 at 75 5/8.
* Nynex said it will cut its work force by 16,800 by the end of 1996 and reported a net fourth-quarter loss of $1.24 billion, or $3 a share. The stock ended down 1/4 to 39 1/8.
* Apple Computer was the most active Nasdaq stock, rising 1 5/8 to 35 after announcing a deal with BellSouth for its Newton MessagePad.
* Compuware gained 2 1/2 to 33. After the close, it reported a rise in third-quarter earnings.
* Boeing posted fourth-quarter earnings that were above Wall Street expectations, but analysts said a full recovery at the aerospace company is still a ways off. It fell 7/8 to 44 3/8.
* Among decliners, American Telephone & Telegraph fell 1/2 to 55 1/2, 3M fell 1 3/8 to 111 and Procter & Gamble lost 1 1/8 to 58 1/4.
Other Markets
Bond market trading was described as technically driven, with little news to propel prices from the narrow range that has dominated recent trading action.
The yield on the Treasury’s main 30-year bond rose to 6.30% from 6.28%, while its price, which moves in the opposite direction, fell 5/16 point, or $3.13 per $1,000 in face value.
Prices of short-term Treasury securities, meanwhile, were 1/32 point lower to unchanged, and intermediate maturities fell by up to 5/32 point, the Telerate Inc. financial information service reported.
Analysts said the scattered price declines were not linked to any single factor but instead reflected the sentiment that the market has little room to further advance after last year’s powerful rally.
Meanwhile, in currency trading, the dollar finished mixed in light trading, as some traders sold the currency to lock in profits from its rise Friday.
The dollar stayed within narrow ranges against most European currencies, traders said. After rising against the Japanese yen during Tokyo trading, the dollar began to fall, closing just above its Friday level.
In commodities trading, gold prices weakened. On the New York Comex, gold for current delivery closed at $381.10 an ounce, off 30 cents from Friday, while silver for current delivery closed at $5.106 an ounce, up 0.4 cent.
Elsewhere, light, sweet crude oil for March delivery rose 23 cents to $15.17 a barrel.
Market Roundup, D8
