FINANCIAL MARKETS : Dow Gives Up a Bit of Last Week’s Gains
Profit-taking after last week’s big gains drove Wall Street stocks lower Monday, while bonds and the dollar drifted ahead of a key Federal Reserve meeting Tuesday.
Mexican stocks plunged 96.48 points, or 4.15%, to 2,231.11 on Monday after peasant rebels in Chiapas launched troop movements that raised the threat of war in the southern state.
It left the Bolsa at its lowest level in five months amid concerns that the potential violence will keep foreign investors away.
On Wall Street, the Dow Jones industrial average, which had gained 116 points last week, retreated 16.49 points to 3,790.70.
Broader market measures also receded. The New York Stock Exchange composite index edged down 0.50 point to 250.04 and Standard & Poor’s 500 stock index dipped 0.89 point to 457.91. The Nasdaq stock market composite fell 1.18 points to 727.89 and the American Stock Exchange market value index dropped 0.50 to 425.73.
Losers outnumbered gainers by about 4 to 3 on the Big Board, where 271.69 million shares changed hands.
That was far below Friday’s volume, which was inflated by trading tied to quarterly options and futures expirations known as “triple witching hour.” By 4 p.m. Friday, 479.18 million shares had changed hands on the NYSE floor, the third-busiest day ever.
Market analysts said Monday’s minor setback for stocks was not surprising, given the recent strength on Wall Street.
Sellers were motivated by desires to collect profits amassed as the market advanced over five of the previous six sessions, particularly Friday’s surge that carried the Dow average up nearly 42 points.
The selling also reflected some uneasiness ahead of a today’s monetary policy meeting by the Fed’s Open Market Committee.
The Fed’s policy-setting panel is expected to discuss whether another interest rate increase is needed now to subdue the economy to a non-inflationary growth rate. Six interest rate hikes this year have been part of the central bank’s anti-inflation campaign.
In an illustration of the anxiety over the meeting, the bond market didn’t stray far from its opening levels, with the main 30-year Treasury bond yield falling to 7.83%, down from 7.85% Friday, while its price, which rises when rates fall, gained 3/16 point, or $1.88 per $1,000 in face value.
Among Monday’s highlights:
* Caesars World rocketed 20 5/8 to 65 7/8 in Big Board-leading turnover after ITT offered $67.50 a share, or about $1.7 billion, for the gambling company. Other hotel and gaming stocks surged, with Circus Circus up 1 3/8 to 22 3/4, Grand Casinos adding 3/4 to 14 1/8 and Bally Entertainment up 1/2 at 6 1/4. ITT fell 3/8 to 81 1/2.
* U.S. Shoe leaped 2 3/8 to 19 in response to word that Nine West Group is in negotiations to buy U.S. Shoe’s footwear division. Nine West rose 1/2 to 26 3/4.
* One of the session’s biggest losers was Cyrix, which tumbled 9 1/4 to 19 1/4 after the computer chip manufacturer issued a grim preview for the first half of 1995.
* Liz Claiborne fell 1 7/8 to 20 after the apparel maker said it plans to take a fourth-quarter pretax charge of $20 million to $30 million.
* Mohawk Industries plunged 3 1/2 to 12 after it said its fourth-quarter net will be 30% to 40% lower than the prior year’s amount.
* Chiron rose 3 to 78 after its investment rating was raised to near-term buy from above average by Merrill Lynch & Co.
Except for Mexico, overseas stock markets were mostly higher. Tokyo stocks closed firmer, with the 225-share Nikkei average rising 107.42 points to 19,270.85. In Europe, Frankfurt’s DAX average ended up 5.88 points at 2,075.94, while in London, the Financial Times 100-share average finished up 20.8 at 3,034.4.
In the currency markets, meanwhile, the dollar rose against most major currencies, although it fell against the Japanese yen. In New York, the dollar was quoted at 100.17 yen, down from 100.24 Friday. The dollar was also changing hands in New York at 1.574 German marks, up from 1.573.
Market Roundup, D12
DAILY DIARY
Dow Jones Industrials High: 3,815.26 Close: 3,790.70
Low: 3,764.46
New York Volume 272.02 million shares
Interest Rates 30-year T-Bond: 7.83% 1-year T-Bill: 7.11%
