YOUR MONEY : FINANCIAL MARKETS : Lackluster Earnings Lead Stocks Lower
Stocks sagged Tuesday under the weight of some disappointing corporate earnings and ongoing worries about interest rates.
Unimpressive quarterly results from energy companies and some other blue chips depressed the Dow Jones industrial average, which eased 6.16 points to 3,735.68.
Overall, losers led winners by about 5 to 4 on the Big Board, where the trading pace remained sluggish at just 231 million shares.
The picture was far different in Mexico City, however: Stocks there surged to their highest level in six weeks amid optimism about second-quarter earnings, which have come in surprisingly strong so far.
Mexico’s Bolsa stock index soared 79.46 points to 2,393.40, after rising 13.28 points Monday and 67.85 points last Friday.
On Wall Street, Tuesday’s weakness coincided with an uneasy atmosphere in the bond market as the Treasury sold $17.30 billion in two-year notes.
Though demand for the new notes turned out to be slightly better than expected--the average yield was 6.17%, down from an expected 6.18%--longer-term yields still inched up for the day.
The yield on the key 30-year T-bond rose to 7.54% from 7.52% on Monday.
The Treasury will test the market again today when it sells five-year notes. Any shortfall in demand for the notes could signal that investors remain skittish about the potential for another rise in interest rates.
Last week, Federal Reserve Board Chairman Alan Greenspan issued what many economists believe was a veiled warning that the central bank is poised to boost short-term rates again to further slow the economy.
While watching the edgy bond market, equity investors monitored corporate earnings reports Tuesday, coming away particularly unimpressed with energy companies’ depressed results.
Among the market highlights:
* Oil and gas stocks under pressure included Chevron, down 3/4 to 43; Texaco, off 7/8 to 62 1/8; Amoco, down 1 1/8 to 58 7/8; Sonat, down 3/4 to 32 1/2, and Unocal, off 1/4 to 29.
* Boeing fell 7/8 to 45 1/8 after posting a 48% drop in its second-quarter profit due to sharply lower sales. It said commercial jet deliveries are expected to remain low through 1995.
* Another Dow stock, Eastman Kodak, reported earnings close to predictions, but the stock still tumbled 1 5/8 to 47 7/8.
* Software company Powersoft slid 7 1/2 to 43 in heavy Nasdaq trading after company officials said third-quarter earnings would be even with or below those posted in the second quarter.
* On the plus side, Digital Equipment rose 1 to 19 3/4 after reporting a fourth-quarter loss but vowing to claw back to profitability by the end of the calendar year.
* Among NYSE-traded Mexican stocks, Telmex leaped 1 1/2 to 58 3/4, Grupo Tribasa gained 1 3/4 to 29, Televisa surged 2 1/4 to 53 7/8 and Grupo Simec added 7/8 to 24 3/8.
“With the positive earnings news of Telmex, Grupo Carso and other companies,” investors bought shares of other firms that will report second-quarter earnings later this week, said Al Hassinger, a trader at Abaco International.
Other foreign markets also closed higher. In Frankfurt, the 30-share DAX average ended up 15.74 points at 2,151.96, while Tokyo’s 225-share Nikkei average closed at 20,345.37, up 47.71 points.
London’s Financial Times 100-share average rose 11.1 points to 3,117.2.
Meanwhile, the dollar ended mostly lower against key currencies in a second consecutive session of quiet trading. In New York, the dollar was quoted at 98.28 Japanese yen, down from 98.75 on Monday. It also fell against the German mark, ending at 1.584 marks, down from 1.590.
In commodities trading, platinum futures shot to their highest level in more than 3 1/2 years on forecasts for strong Japanese demand and worries about supply disruptions in South Africa and Russia, the two largest producers.
Platinum for October delivery surged $9.40 on the New York Merc to $430.50 an ounce.
Market Roundup, D6
