FINANCIAL MARKETS : Profit Taking Halts Dow’s March
Blue-chip stocks settled lower on profit taking Tuesday, while bond yields edged higher as investors awaited a speech by Federal Reserve Board Chairman Alan Greenspan.
The Dow Jones industrial average slipped 3.12 points below the record high it reached Monday, to 4,550.56.
Once again, the Nasdaq composite index of mostly smaller stocks, heavy with technology issues, outshined the Dow. The Nasdaq index rose 7.74 points to a record 929.83, marking its sixth straight all-time high.
Traders said some portfolio managers are rushing into already sky-high tech issues for quarter-end “window dressing” purposes: They want clients to see winning tech stocks on their June 30 statements.
In the broad market, the New York Stock Exchange composite index eased 0.42 point to 291.76 on Tuesday, and Big Board losers nosed out gainers by about 6 to 5. Volume was active at 384.3 million shares.
Analysts said blue-chip stocks paused after their latest record-setting advance in part because the bond market’s rally stalled.
The Treasury’s main 30-year bond yield rose to 6.58% from 6.56%, and shorter-term yields also edged up.
Both the bond and stock markets appeared stuck in holding patterns as they awaited clues to Fed interest rate policy, which Greenspan could reveal in a speech that was scheduled for Tuesday night at the Economic Club of New York.
The notion that interest rates are headed still lower was bolstered by another government report Tuesday that depicted economic weakness. The Commerce Department said housing starts, an important indicator of economic vitality, fell 1.3% in May despite lower mortgage rates that typically stimulate the home building industry.
Among the market highlights:
* Tech issues continuing to surge included Micron Technology, up 4 3/4 to 57 3/4; Intel, up 3 1/4 to 65; Compaq, up 2 3/8 to 45 3/8, and IBM, which rocketed 4 to 97 3/4.
Also, Apple surged 3 to 47 3/8 and Microsoft gained 1 9/16 to 91 3/8.
* Citicorp leaped 1 5/8 to 58 3/4. The bank holding company announced plans to repurchase up to $3 billion of common or convertible preferred stock over the next 24 months.
Other bank issues continued to rise in the aftermath of a major East Coast bank merger announced Monday. Winners included Bank of Boston, up 1 1/4 to 37 5/8; Barnett Banks, up 1 1/4 to 51 1/8, and Wells Fargo, up 1 1/8 to 183 3/4.
* The Big Three car makers gained on hopes that the Fed will cut interest rates, a move that could boost their sales. Chrysler rose 1 7/8 to 46 1/4, GM added 1 1/2 to 48 1/4 and Ford was up 5/8 to 30 5/8.
* Bolt Beranek soared 9 1/8 to 27 5/8 on news that it had reached an agreement with AT&T; to provide businesses with a broad range of services for access to the Internet. AT&T; rose 1/8 to 52 7/8.
* On the downside, Walt Disney dipped 1/8 to 58 1/4 after the company unveiled plans for a fourth theme park. And Franklin Quest plunged 5 1/8 to 26 3/4 after it reported lower quarterly earnings.
* Santa Fe Pacific Pipeline Partners surged 4 to 35 7/8. The medium-term investment rating on the stock of the pipeline owner and operator was raised to “above average” from “neutral” by Merrill Lynch.
In Tokyo, the 225-share Nikkei average fell 34.36 points to 14,665.70, while Frankfurt’s 30-share DAX average ended at 2,136.68 points, down 5.07 points. Mexico’s Bolsa index fell 20.18 points to close at 2002.25.
