Stocks Mixed as Long-Term Yields Climb
Market Overview * U.S. stocks ended mixed in quiet trading Tuesday as investors focused on rising long-term interest rates.
Overseas, most markets rebounded after Monday’s plunge.
* Long-term bond yields rose sharply as the Treasury launched its quarterly refinancing. Short rates also inched up.
* Gold staged a partial rebound from Monday’s slide, but key commodity markets closed early because of a snowstorm in the East.
Stocks
The market traded in a narrow range as investors sought firm footing, still reeling from last Friday’s big slide.
The Dow industrial average eased 0.29 point to 3,906.03, dragged down by a selloff in Sears shares.
Smaller stocks had an easier time. The Nasdaq composite index gained 3.50 points to 782.70, and winners topped losers 14 to 11 on the Nasdaq market.
On the New York Stock Exchange, winners edged losers by 12 to 9, though most broader blue-chip indexes lost ground with the Dow.
Big Board volume totaled 318.2 million shares, down from Monday’s 348.3 million.
Analysts said investors remain tentative after Friday’s 96-point Dow drop following news that the Federal Reserve Board was tightening credit for the first time since 1989.
The Dow rebounded nearly 35 points Monday, but Tuesday was “a day of gentle sparring between buyers and sellers,” as one analyst put it. “A lot of people are still trying to make up their minds what to do.”
A continuing rise in long-term bond yields didn’t help sentiment Tuesday. Also, the winter storm in the East slowed volume in the afternoon as some traders left early to escape the snow.
Among the market highlights:
* In the Dow, industrial issues staged another rally, while consumer stocks were weak.
Among industrials, AlliedSignal jumped 1 1/2 to 77 3/8 after reporting strong quarterly earnings, declaring a two-for-one stock split and raising its dividend. Also rising sharply were Alcoa, up 1 1/4 to 79 3/8, and GM, up 1 3/4 to 64 3/4.
On the downside, Sears plunged 3 1/4 to 47 3/4 on its quarterly earnings report. Other consumer losers included Philip Morris, off 1 1/8 to 58 3/4; Disney, down 1 to 45 5/8, and McDonald’s, off 1/2 to 59 1/8.
* Pfizer fell 2 1/4 to 59 3/8 after the drug firm forecast 1994 earnings on the low side of analysts’ estimates. Other drug stocks also fell. Merck lost 5/8 to 34 1/2 and Schering-Plough dropped 1 5/8 to 60 3/4.
* Some food stocks were weak after Kellogg raised cereal prices. Some investors fear a consumer backlash. Kellogg lost 7/8 to 51 3/8, General Mills sank 1 1/4 to 57 3/4 and Quaker Oats was off 1/2 to 63 3/4.
But Southland-based Dole Food gained 1 1/4 to 30 5/8 after Merrill Lynch upgraded the stock.
* Among other Southland issues, Earth Technology rose 3/8 to 13 1/4 after agreeing to acquire Summit Environmental in a stock swap. And toy giant Mattel surged 1 3/4 to 25 on a strong earnings report.
* In the tech sector, chip makers soared in advance of an industry report on January orders. Intel gained 1 1/2 to 63 1/2, Motorola soared 4 to 100 1/4 and Advanced Micro Devices surged 1 5/8 to 22.
* America Online jumped 3 to 73 1/2 after Apple Computer said it holds warrants to buy a 6.6% stake.
Overseas, most major markets stabilized. Tokyo’s Nikkei index added 236.83 points to 20,251.23, Frankfurt’s DAX index rose 27.81 points to 2,107.21 and London’s FTSE-100 index was up 21.1 points to 3,440.20.
Other Markets
Interest rates were stable for much of the session but surged late in the day.
The 30-year Treasury bond yield jumped to 6.45% from 6.39% on Monday. Three-month T-bill yields inched up to 3.32% from 3.30% on Monday.
The Treasury’s auction of three-year notes Tuesday, the first batch of $40 billion in new securities to be sold this week, may have disappointed traders. The average yield on the notes was 4.83%, highest in 15 months and a byproduct of the Fed’s decision last week to tighten credit.
The Treasury will sell 10-year notes today and 30-year bonds on Thursday.
In other markets:
* Gold staged a rally after Monday’s dive. Near-term gold futures added $3.40 to $382.30 an ounce on the Comex. Silver added 3.1 cents to $5.26. But the session was abbreviated by the eastern storm.
* March crude oil futures eased 4 cents to $15.21 a barrel on the New York Merc after erasing strong early gains on talk of cuts in OPEC and Russian production.
Market Roundup, D8
