FINANCIAL MARKETS : Stocks Mixed; Latin, Asian Indexes Revive
Stocks ended mixed and bond yields edged higher Tuesday as investors kept to the sidelines ahead of President Clinton’s State of the Union address and testimony by Federal Reserve Board Chairman Alan Greenspan before Congress.
The Dow Jones industrial average fell 4.71 points to 3,862.70 in the last minutes of trading after remaining up for most of the day.
At the same time, advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange. Volume on the floor of the Big Board came to 325.18 million shares, down from 325.81 million on Monday.
Broad market indexes closed modestly higher, with the exception of the Nasdaq composite index, which rose 3.69 points to 763.20.
Stocks traded in positive territory early in the day. Investors were cheered by recovery in foreign markets, traders said.
Overseas, markets generally rebounded. Stocks that fell sharply Monday in Tokyo--as damage estimates from last week’s earthquake worsened--recovered in Tuesday’s overnight session in a technical rebound. Tokyo’s 225-share Nikkei average closed up 275.24 points at 18,060.73. Hong Kong’s Hang Seng index closed at 7,022.90, up 54.97 points.
In Mexico, the Bolsa index closed at 2,095.61, up 27.12 points, or 1.31%, amid expectations that the loan guarantees pledged by the Clinton Administration will be approved by the U.S. Congress.
Elsewhere, London’s FTSE-100 average ended up 14.8 at 2,969.0, while Frankfurt’s 30-share DAX average ended down 8.79 points at 2,018.04.
Stocks also closed higher in Latin America, rising 2.2% in Brazil, 1.5% in Argentina and 1.54% in Colombia.
Clinton was scheduled to make his State of the Union address late Tuesday and Greenspan was scheduled to address Congress in three separate meetings today and Thursday on the Mexican financial crisis, the U.S. economy and the U.S. budget.
The Fed will consider a rate hike next Tuesday when its Federal Open Market Committee meets.
Stock investors don’t like to see rates rise because that increases the cost of money to companies and makes shares less attractive relative to interest-bearing investments.
Uncertainty about the fate of the U.S. economic aid package to Mexico also weighed on stock prices.
Many members of Congress oppose Clinton’s proposed $40-billion package of loan guarantees to Mexico. Democrats and Republicans differ on what conditions the package should include. The plan, stalled in committee meetings, probably won’t be put to a vote until next week.
In the bond market, the yield on the Treasury’s main 30-year bond closed at 7.92%, up from Monday’s 7.90%. Its price, which falls when yields rise, ended down 3/16 point, or $1.88 per $1,000 in face value.
There was little news to provide direction for the bond market, and investors were reluctant to embellish their bond holdings ahead of Clinton’s speech, Greenspan’s testimony and the Fed policy-setting meeting next week.
Yields on three-month Treasury bills rose to 5.96% from the level at auction Monday as the discount rose 0.06 percentage point to 5.8%. Six-month yields rose to 5.52% from the level at auction Monday as the discount rose 0.03 point to 6.24%. One-year yields rose to 7.01% as the discount rose 0.03 point to 6.59%.
The government’s auction of two-year notes had little impact on the market, said Michelle Laughlin, an economist with Sanwa Securities. The Treasury Department awarded its offering of $17.25 billion in two-year notes at a rate of 7.57%, which was within market expectations.
Among the market’s highlights Tuesday:
* Telefonos de Mexico fell 3/4 to 35, reacting to the reports of improved prospects for the Mexican economic aid package.
* Among companies reporting earnings, Watkins-Johnson, maker of defense electronics, jumped 2 3/8 to 34 3/8 after reporting a rise in fourth-quarter profit.
* United Airlines parent UAL fell 4 1/8 to 95 1/2 despite earnings in line with Wall Street forecasts. Analysts attributed the fall to profit taking.
* Medical device maker Cordis shot up 2 5/8 to 60 3/8 after its quarterly profits beat analysts’ expectations.
* Lukens, maker of steel plate, rose 1 to 28 1/2 after posting a 69-cent-per-share profit in the latest quarter, contrasted with a loss of 57 cents a share a year ago.
* Walt Disney rose 7/8 to 47 3/4 after it raised its quarterly dividend.
* Among technology stocks that posted gains, Intel was up 1 1/8 at 71 1/2 and Bay Networks added 1 to 31 1/4.
* Santa Fe Pacific was unchanged at 18 after the company amended its merger agreement with Burlington Northern.
Elsewhere, the dollar held steady against most key currencies in uneventful dealings, as traders looked to Greenspan’s testimony and economic growth data for hints on U.S. interest rate policy.
