FINANCIAL MARKETS : Dow Falls, but Nasdaq Surges on Tech Issues
Blue-chip stocks closed moderately lower Wednesday as investors took profits, but the Nasdaq index surged to another record high as investors bought technology issues.
The dollar rose, but bonds were unchanged in quiet trading ahead of the February U.S. trade balance report due today.
The Dow Jones industrial average hovered at slightly lower levels for most of the session. There was a sharp selloff around 2 p.m., however, but computerized buying programs trimmed the losses by the end of the day. The Dow closed off 12.45 points at 4,422.60, declining for the second out of eight sessions.
On the New York Stock Exchange, declining issues led advancers by a 4-3 margin. Volume was moderately heavy at 349.40 million shares, down from 366.24 million on Tuesday.
Broad-market indexes were mixed. The Nasdaq composite rose to another record close as computer stocks extended their rally, climbing 3.68 points to 871.93. But the NYSE composite index fell 0.75 point to 283.52, and the Standard & Poor’s 500-stock index slipped 1.12 points to 527.07.
Investors tinkered with their portfolios for much of the day, lightening up on the so-called “consumer non-durable” issues and buying basic-material stocks such as paper, aluminum and steel.
“This morning, people bought basic materials thinking the economy could have a soft landing,” said Leon Brand, international stock analyst at NatWest Securities. “But as the volatility started to increase during the day and we started to see the so-called winners being hit, investors started to get nervous.”
Investors were worried about being caught fully invested at the market’s top, Brand said. “Everyone is looking for that 5% correction, and nobody wants to be in the market when that happens.”
The dollar moved higher Wednesday against most major currencies after the office of the new French President dismissed as nonsense a newspaper report that he may change the European monetary system.
At the close of trading in New York, the dollar was quoted at 86.85 Japanese yen, up from 86.60 yen on Tuesday. It was also changing hands at 1.447 German marks, up from 1.444.
In the bond market, trading was described as light, with many investors taking a break from this month’s market rally as they await further news about the economy. Strategists said indications of a sharp slowdown could refuel bullish bond sentiment.
At the close, the Treasury’s main 30-year bond yield held at the 14-month low of 6.86% reached late Tuesday. Its price fell 1/32 point, or 31 cents per $1,000 in face value.
Among Thursday’s highlights:
* Consumer stocks that faltered included Procter & Gamble, down 1/8 to 69, and Philip Morris, off 3/8 to 70 1/8.
* Manufacturing and basic materials stocks led the Dow industrials lower, including 3M, down 1 1/4 to 60 1/4; United Technologies, off 1 1/4 to 74 3/8; Allied Signal, off 1 to 40 3/4, and DuPont, down 1 1/4 to 68.
Computer stocks bucked the trend, extending an exuberant rally that started last month amid favorable sales projections.
* IBM rose 1/4 to 94 7/8. A story in the New York Times suggested that the computer giant is well into a recovery and that its earnings and stock will continue to improve. Dell Computer, however, fell 1 3/8 to 56 1/8 after the company failed to match Wall Street’s expectations for first-quarter earnings.
* Semiconductor issues rose after the Semiconductor Industry Assn. raised its 1995 sales growth projections to about 40% from a previous forecast of 15%. National Semiconductor rose 1 3/8 to 27 7/8, Intel rose 1 7/8 to 110 3/4 and Lam Research surged 3 1/2 to 58 3/8.
* Applied Materials shot up 11 1/2 to close at 80 1/4 in very heavy trading. Other semiconductor equipment makers joined the ride, with Novellus up 4 3/4 to 66 1/2 and Tencor Instruments gaining 3 7/8 to 73 3/4.
* Among individual issues, airline stocks stumbled after the chief executive of AMR, American Airlines’ parent company, said the airline industry’s business cycle is near its peak. AMR lost 2 to 67 3/8; UAL, United Airlines’ parent, fell 2 3/4 to 113 3/4, and Delta lost 2 1/2 to 63 3/4.
* Time Warner rose 1 3/8 to 40 1/8 on rumors that Seagram may sell a block of its Time shares to investor Ronald Perelman.
* Polaroid added 1 3/4 to 37 1/2 after Prudential upgraded the stock to “buy” from “hold.”
In overseas stock markets, Tokyo’s 225-share Nikkei average ended up 82.45 points at 16,471.35. In Frankfurt, the 30-share DAX average fell 15.20 points to 2,095.32, and London’s FTSE-100 average closed at 3,297.4, off 3.4 points. Mexico’s Bolsa index fell 6.5 points.
