Dow Edges Up 4.32 as Bond Yields Steady
Stocks bounced around with the bond market on Wednesday, ending mostly higher but failing to strongly follow through on Tuesday’s big rebound.
The Dow industrial average, which rocketed 82.06 points on Tuesday, added 4.32 points to 3,679.73 on Wednesday as winners topped losers by 13 to 10 on the New York Stock Exchange.
But the Standard & Poor’s 500 index eased 0.24 point to 448.05, and the Nasdaq composite index of mostly smaller stocks slipped 0.23 point to 750.72. Trading volume declined markedly.
For the first time in nearly two weeks, the market did not take an emotional roller coaster ride, and interest rates appeared to stabilize.
Long-term bond yields closed mostly unchanged. The yield on 30-year Treasury bonds finished ast 7.24%, same as Tuesday.
Some bond traders were encouraged that short-term interest rates continued to pull back, suggesting that the market doesn’t see the Federal Reserve Board hiking rates again soon. The yield on 3-month Treasury bills fell to 3.64% from 3.74% on Tuesday.
Still, analysts remain cautious about stocks and bonds, after the stunning selloffs of the past two weeks. Though bond yields finally fell back on Tuesday, allowing stocks to rebound, many traders doubt that investors will quickly pour back into the markets.
“They’re digesting Tuesday’s bounce and trying to figure out which way to go,” said Michael Metz, investment strategist at brokerage Oppenheimer & Co.
“A certain number of bargain hunters have come into the market,” said Ricky Harrington, analyst at brokerage Interstate-Johnson Lane said. But “we’re in an ongoing downward trend” he said.
Investors continue to be worried about the prospect for higher interest rates if the economy strengthens further.
Among Wednesday’s highlights:
* Many heavy industry stocks advanced strongly for a second day, as bargain-hunters sought out issues that should gain from a healthier economy. Caterpillar jumped 3 3/4 to 120, Deere added 3/4 to 87 1/8, GM gained 1 1/2 to 58 3/4, Monsanto was up 2 to 80, Cooper Industries leaped 1 3/8 to 38 5/8 and Timken rose 3/4 to 34 1/4.
* Some tech issues also gained. Cirrus Logic advanced 1 7/8 to 36 1/4, Sybase added 2 to 49 1/4, Motorola rose 1 3/4 to 106 3/8 and Computer Associates was up 1 to 33.
But AST Research plunged 2 1/8 to 19 1/2. The personal computer firm denied rumors that it may have to restate prior quarters’ earnings.
* Some retail issues continued their Tuesday rally. J. C. Penney rose 3/4 to 57 1/4, Ann Taylor surged 1 5/8 to 35 3/4 and Dayton Hudson added 7/8 to 77 1/8.
* On the downside, cable TV stocks plunged after Southwestern Bell and Cox Cable ended plans to form a joint venture. Cablevision Systems dove 3 3/8 to 46, Tele-Communications Inc. lost 15/16 to 19 15/16, and Time Warner dropped 1 1/8 to 38.
Elsewhere, McCaw Cellular fell 1 3/4 to 48 after a federal judge said the company’s merger with AT&T; would violate the consent decree that broke up the Bell System a decade ago. AT&T; sank 3/4 to 51 1/4.
* Gaming stocks tumbled after voters in Missouri defeated a constitutional amendment that would have allowed the use of slot machines in that state. President Riverboat plummeted 5 3/8 to 12 1/2, Station Casino lost 3 13/16 to 14 3/4, Promus sank 3 1/4 to 37 5/8 and Argosy Gaming sank 4 1/4 to 19 3/4.
Overseas, foreign markets closed generally higher. Tokyo’s Nikkei average rose 133.53 points to 19,696.74, Frankfurt’s DAX index soared 32.91 points to 2,191.20 and London’s FTSE-100 index was up 15.3 points to 3,131.5.
Smaller Asian markets were helped by Wall Street’s Tuesday rebound. Hong Kong’s Hang Seng surged 204.40 points to 9,234.31, and Singapore’s Straits Times index rocketed 54.08 points to 2,115.57.
In Mexico City, the Bolsa index rose 26.37 points to 2,260.52.
In other markets, the dollar finished slightly higher against most foreign currencies. Gold added 50 cents to $384.90 an ounce on the New York Comex while silver fell 4.4 cents to $5.50.
