FINANCIAL MARKETS : Dow Slides 35; Treasury Yields Rise; Dollar Treads Water
Blue-chip issues took a late-afternoon dive, but most of the stock market kept its head above water Wednesday, closing mixed on a day of light trading with little economic or corporate news.
Analysts said selling accelerated after the Dow Jones industrial average dipped below 4,600 at late morning. That number has been a recent benchmark and a drop below it triggered some selling by bearish investors who fear this year’s market rally may be waning.
The Dow fell 35.57 points to close at 4,584.85.
“You may have had some people deciding to take profits, given the magnitude of the market’s move [upward] since last November,” said David Bostian, chief economist at Herzog, Heine, Geduld Inc. in New York.
Technology stocks, after wavering early in the day, resumed their recent strength and closed higher.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange. Big Board volume was 291.39 million shares, up slightly from Tuesday’s 290.36 million.
The NYSE composite index fell 1.15 points to 299.01. The Standard & Poor’s 500-stock index dropped points 2.38 to 557.14.
In the bond market, yields on five-year Treasury notes rose in Wednesday’s auction to the highest level since April.
The high yield was 6.37%, up from 6.219% at the last auction on July 26. It was the highest rate since five-year notes sold for 6.815% on April 26.
The yield on the Treasury’s main 30-year bond rose to 6.91% from 6.89% late Tuesday. The dollar was little changed against most major currencies amid growing speculation that the Bundesbank will trim its discount rate today.
The dollar was trading at 1.4833 marks, down from 1.4865 marks in New York late Tuesday. Against the Japanese yen, the dollar fell to 96.60 in late New York dealings, down from 96.85 late Tuesday.
Among Wednesday’s highlights:
* Goodyear Tire & Rubber fell 1 1/2 to 39 1/2. The company revealed it has been subpoenaed as part of a Justice Department antitrust investigation of the tire industry.
* Cyclical stocks that depend on future growth in the economy were also weak. Caterpillar lost 1 3/8 to 65 3/8 while International Paper fell 1 1/4 to 81 1/4.
Economist Bostian attributed such declines to fears on the part of some investors of disappointing third-quarter earnings reports.
Joseph Battipaglia, chief investment strategist for Gruntal & Co., said the dearth of economic news Wednesday left some market players in a cautious mood.
“Waiting for the third-quarter reports and signs of strength in the economy leaves lots of room for interpretation and makes it a safe bet to raise some cash [by selling stocks],” he said.
* Microsoft fell 1 7/16 to 97 7/8 on the Nasdaq as some investors pocketed their profits from the software company’s pre-Windows 95 price rally.
Other tech stocks strengthened as investors remained generally optimistic about continued high demand for computers and related products.
Computer maker Sun Microsystems gained 2 7/8 to 60 1/2. Software maker Borland International rose 1 7/8 to 14 7/8 while Electronic Arts, an entertainment software company gained 2 5/8 to 38 1/8.
In overseas trading, Tokyo stocks closed moderately lower. The Nikkei average ended 145.79 points or 0.82% lower at 17,731.98.
Mexican stocks closed sharply lower. The Bolsa index lost 46.31 points, ending at 2,443.24.
