MARKET: Stocks Slip Along With Hopes for Ailing Dollar : FINANCIAL MARKETS : Traders Leery of G-7 Help on Ailing Dollar
The dollar slid Tuesday amid doubts that the Group of Seven industrial nations will put together a plan to shore up the battered greenback, and blue-chip stocks edged lower, ending a three-session string of record closing highs.
Bond yields rose, pushing prices lower as surprisingly upbeat economic news revived fears of inflation.
The Dow Jones industrial average never strayed far from its starting point and ended slightly below Monday’s close, which had been the first finish above 4,300. It dipped 3.81 points to 4,300.17.
Broader indicators heavily weighted with New York Stock Exchange listings also closed lower. The NYSE composite index fell 0.45 points to 276.39 and Standard & Poor’s 500-stock index slid 0.79 points to 512.10.
However, technology stocks maintained their upward momentum, enabling the Nasdaq to climb 2.37 points to 831.28. At the American Stock Exchange, the market value index inched up 0.02 point to 473.59.
In the broader market, advancing Big Board stocks outnumbered decliners by fewer than 100 issues, while Big Board volume rose to 352.25 million shares, from Monday’s 326.42 million. Market analysts were impressed that the market held up as well as it did, given Wall Street’s extended run that has brought the Dow to repeated records. Some forecasters have been expecting stocks to retreat in a big way as investors cash in profits.
The dollar slid against key currencies Tuesday as hopes faded that the United States and the other economic powers will come up with a plan to rescue the weakened greenback.
At the close, the dollar was quoted in New York at 81.93 Japanese yen, down from 83.03 on Monday and the first finish below 82 in five trading sessions.
The dollar also fetched 1.371 German marks, down from 1.375.
Stocks came under pressure when bond yields rose after a widely followed survey showed that consumer confidence in the economy shot up to its highest level in nearly five years.
The Treasury’s main 30-year bond yield rose to 7.33% from 7.30% on Monday. Its price, which moves in the opposite direction, was down 9/32 point, or $2.81 per $1,000 in face value.
The Conference Board’s monthly assessment of consumer confidence showed that Americans have become significantly more optimistic. An index based on the consumer survey rose to 105.5 from a revised reading of 100.2 in March. It was the highest level since a 116.16 reading in July, 1990, just before confidence plummeted when Iraq invaded Kuwait, leading to the Persian Gulf War.
Reassuring inflation-related news from the government was a plus for financial markets and offset some concern generated by the confidence reading.
The Labor Department reported that U.S. workers’ wages, salaries and benefits rose 2.9% in the year ended March 31, the smallest increase on record. The report suggested little employment cost pressure on prices.
Fears that the slumping dollar could fuel inflation and other economic ills weighed on investors’ minds as financial officials from the Group of Seven industrial countries met in Washington. Although the gathering wasn’t expected to produce a concerted initiative to raise the dollar’s value, market participants stayed on guard for surprises.
Results from companies on their first-quarter financial results attracted investor attention, motivating buyers and sellers. With the earnings season winding down, the verdict is that many American companies enjoyed a robust quarter.
Among Tuesday’s highlights:
* Motorola rose 1 3/4 to 56 in active trading. Goldman Sachs added the stock to its priority list.
* Compaq Computer, which last week reported earnings in line with expectations, rose 1 to 38 1/2.
* Kmart fell 3/8 to 15 after it cut its quarterly dividend in half to 12 cents per share and said it expects to report a first-quarter loss.
* Autodesk fell 2 1/2 to 34 3/4. Dean Witter downgraded the stock to “neutral” from “buy.” Cordis fell 3 3/4 to 75 after reporting third-quarter earnings. Amdahl fell 2 3/8 to 10 1/2 despite posting an improved first-quarter profit.
* IBM rose 1/8 to 93 5/8 as investors focused on the stock as the company held its annual meeting, where shareholders expressed dismay over IBM’s decision to hold its quarterly dividend at 25 cents a share.
* UAL gained 2 7/8 to 117 1/2 after it reported its first profitable first quarter since 1989.
* Walt Disney, which reported a 27% increase in earnings, was unchanged at 55 3/4.
Positive performances by stocks overseas provided a favorable backdrop for U.S. trading.
Germany’s DAX average closed at 2,006.99, up 30.78 points, while Tokyo’s 225-share Nikkei average rose 106.49 points to end at 16,910.54. In London, the FTSE-100 average finished at 3,214.9, 5.6 points higher.
However, Mexico’s Bolsa index slipped 16.05 points to 2,001.15.
Market Roundup, D8
