FINANCIAL MARKETS : Stocks, Bond Yields Ease; Dow Retreats From High
Stocks edged lower Tuesday as investors took profits after a five-session rally, while bond yields closed marginally lower.
The Dow Jones industrial average eased slightly to finish at 3,937.39, off 0.34 point, after having marched steadily closer to its all-time high of 3,978.36 over the five previous sessions.
Rising issues led losers by about 9 to 7 on the New York Stock Exchange, where trading was active. Big Board volume amounted to 315.19 million shares, down from 325.66 million on Monday.
Broad market indexes moved in a narrow band, with the New York Stock Exchange index dipping 0.11 point to 261.64 and Standard & Poor’s 500-stock index declining 0.33 point to 480.81.
The Nasdaq Stock Market index ended near the break-even point at 778.97, up 0.14 point, while the American Stock Exchange index also closed almost unchanged at 443.14, up 0.02 point.
Analysts said a string of winning sessions on Wall Street had elevated stock prices to levels that provoked limited profit taking. It was encouraging, analysts said, that the market didn’t encounter significant selling.
In the absence of any sensitive economic news, the market lacked direction and failed to derive much strength from bonds yields.
Yields fell, pushing prices higher, in early trading on reports that Federal Reserve Board Gov. John LaWare suggested that the central bank might be close to concluding the tightening phase of its monetary policy. However, yields rebounded somewhat later in the day, following an apparent lack of demand in the secondary market for three-year notes auctioned by the Treasury earlier in the day.
The yield on the key 30-year bond closed at 7.64%, down from Monday’s 7.65%, while its price, which moves in the opposite direction, ended up 3/32 point, or 94 cents per $1,000 in face value.
The sale of new Treasury securities was the first in a three-part government refunding this week. The proceeds go to replenish federal government accounts and make payments on existing debt.
Bond strategists said many secondary investors shied away because they viewed the price of the securities as steep following last week’s sharp rally, which broadly lifted prices in the Treasury market.
Elsewhere, the dollar rose against key currencies, reaching a three-week high against the German mark in intra-day dealings. The dollar closed at 1.536 marks after rising as high as 1.538. On Monday, it closed at 1.532 marks.
The greenback finished at 99.46 Japanese yen, up from 99.38 on Monday.
Among Tuesday’s stock highlights:
* Time Warner jumped 1 1/4 to 39 in heavy NYSE trading. The media and entertainment company announced it will buy privately held Cablevision Industries for stock and assume debt totaling about $2.6 billion.
* Silicon Graphics Inc., Alias Research Inc. and Wavefront Technologies Inc. said they are merging. Silicon Graphics fell 5/8 to 31, Alias shot up 4 1/4 to 26 and Wavefront added 1/8 to 14 1/4.
* BankAmerica rose 3/8 to 46 3/4 in heavy trading. The bank holding company boosted its quarterly dividend and approved the repurchase of $1.9 billion of common shares.
* Komag fell 3 to 23 7/8 after saying first-quarter earnings will be unchanged from its fourth-quarter results.
* Oxford Health Plans rose 2 1/8 to 92 1/2 on strong fourth-quarter profit.
* National Semiconductor fell 1 1/8 to 17 1/4 after the chip maker’s stock rating was reduced to “neutral” from “buy” by PaineWebber.
* Another big mover was WMX Technologies, which topped the Big Board list of active issues. It fell 1 3/4 to 27 1/4 in reaction to news that it will pay $14 a share for the remaining stock of one of its subsidiaries, Rust International, that it doesn’t already own.
Mixed action overseas offered little to inspire Wall Street. Tokyo’s 225-share Nikkei average fell 166.68 points to 18,500.55. In London, the FTSE-100 average ended at 3,072.7, up 10.7 points, and Frankfurt’s 30-share DAX average rose 2.80 points to 2,092.49.
Market Roundup, D4
Interest Rates:
30-year T-Bond: 7.64%
1-year T-Bill: 6.76%
