FINANCIAL MARKETS : Dow Extends Streak, But Tech Issues Fall
Blue-chip stocks soared to another record high Tuesday as the dollar firmed and the latest economic news pointed to moderate growth.
But recently hot technology stocks took a hit on first-quarter earnings concerns.
The Dow Jones industrial average soared 33.20 points or 0.8% to 4,201.61, easily besting its previous high of 4,172.56 reached last Thursday.
The Dow rallied early in the day, sold off in the afternoon, then rocketed again in the final half-hour of trading.
In the broad market, winners outnumbered losers 12 to 7 on the New York Stock Exchange in active trading, and the Standard & Poor’s 500 index joined the Dow at a record, up 3.39 points to 505.24.
But the Nasdaq market of mostly smaller stocks, dominated by technology companies, slumped. The Nasdaq composite index fell 4.33 points to 813.72.
Traders said stocks got support all day from the bond market, where yields eased on the latest economic reports.
The Commerce Department said construction spending fell 0.5% in February after having fallen 0.5% in January, marking the first such back-to-back monthly declines in a year.
Although non-residential outlays jumped to their highest level in more than four years, they were unable to offset the declines in home building (which is sensitive to interest rate changes) and government projects.
The housing data provided further evidence that the economy is slowing.
In response, interest rates eased, with the Treasury’s main 30-year bond yield closing at 7.37%, down from 7.39% on Monday.
Elsewhere, the beleaguered dollar recovered from its record low against the Japanese yen in Asian dealings. Analysts said the U.S. currency was supported by purchases in U.S. trading that followed the Fed’s massive dollar buying on Monday.
In New York, the dollar closed at 86.21 Japanese yen, up from 86.13 on Monday. The dollar was also quoted at 1.379 German marks, up from 1.373.
Repeated attempts by the Clinton Administration to support the U.S. currency through purchases of dollars on the open market have failed. Some economists have speculated that because intervention has not succeeded, the Federal Reserve Board may need to raise interest rates to prop up the currency--despite the economy’s apparent slowdown.
So far, however, the prospect of higher rates prompted by a weaker dollar has not deterred stock buyers much if at all.
But some analysts are concerned about the sudden weakness in technology stocks, which led the market’s advance for much of the first quarter.
Among Tuesday’s highlights:
* Database software firm Sybase plunged 16 1/8, or 41%, to 23 on a massive volume of more than 32.1 million shares, representing nearly half the company’s 68 million shares outstanding.
Late Monday Sybase warned that quarterly earnings would fall far short of expectations because of disappointing sales.
Investors reacted to Sybase’s stock collapse by selling many other tech issues. Apple tumbled 1 5/8 to 33 7/8, Lotus dropped 2 1/2 to 35 1/2, Picturetel slumped 1 3/8 to 35 3/8, Filenet lost 1 to 32 and Intel was off 1 15/16 to 86 9/16.
* The Dow, meanwhile was led higher by consumer issues that have major multinational operations. Those companies are expected to fare better if the U.S. economy continues to slow.
Winners included Procter & Gamble, up 1 5/8 to 67 5/8; McDonald’s, up 7/8 to 34 7/8, and Philip Morris, up 3/4 to 67 1/8.
* Airline stocks also were strong, on expectations of strong March traffic figures. United Airlines parent UAL jumped 2 1/2 to 107, and Delta Air Lines gained 1 5/8 to 63 5/8.
* Electric utility stocks also were broadly higher. The Dow utility index surged 3.76 points, or 2%, to 191.47.
* On the down side, auto stocks suffered after reporting mostly lower March sales. General Motors fell 1 1/8 to 43 1/2, Chrysler shed 2 1/8 to 40 and Ford dropped 1/2 to 26 5/8.
* Timberland tumbled 3 3/8 to 22 3/4 after saying its earnings for the first and second quarters of 1995 will be significantly below Wall Street expectations.
* On the merger front, Moorco International rose 7 3/4 to 21 3/8 after the manufacturer of industrial measurement and control devices received an unsolicited bid of $223 million from FMC Corp. FMC fell 1/4 to 60 3/4.
Many overseas markets closed higher. Tokyo stocks staged a technical rally, and the Nikkei-225 average closed up 249.24 points at 15,630.53. London’s FTSE-100 average shot up 45 points, or 1.4%, to 3,188.1, and Germany’s DAX average gained 34.19 points at 1,965.01.
In Mexico, late profit taking stripped away heavy earlier gains, leaving the Bolsa index 17.22 points lower at 1,905.95. It had earlier risen as high as 1,984.09 on a spate of foreign buying.
In commodities trading, platinum futures prices vaulted to a 4 1/2-year high as investor demand strengthened.
