FINANCIAL MARKETS : Dow Drops 14.09, Ending 4-Day Streak
Blue-chip stocks stumbled on Thursday as investors, concerned that gilt-edge issues may have peaked, sold their holdings to book profits.
But continued buoyancy in the high-tech sector pushed some broad-market indexes to new highs, one of them for a fifth consecutive session.
The Dow Jones industrial average fell 14.09 to 4,679.72, ending a four-day winning streak.
The NYSE’s composite index fell 0.14 to 306.25. But other indexes made new highs.
Standard & Poor’s 500-stock index rose 0.12 to 570.29 and the Nasdaq composite index climbed 6.80 to 1,051.08, with both setting records for a third straight day. The American Stock Exchange’s market value index added 1.95 to 542.72, the fifth straight new high.
Leon Brand, international stock specialist at NatWest Securities, said the profit-taking in blue chips was fueled in part by expectations that the economy may be improving again and that the rising dollar will hinder U.S. exports.
Others said technical factors were more responsible for the declines.
“I think the key thing was the Dow failing at the key resistance level of 4,700,” said Eugene Peroni, a technical analyst at Janney Montgomery Scott in Philadelphia. He referred to the inability of the Dow Jones industrials to break through 4,700 and stay there. The market’s best-known indicator peaked at 4,736.29 on July 17 and has not closed above 4,700 since Aug. 3.
Volume on the floor of the New York Stock Exchange was moderate at 321.7 million shares as of 4 p.m., down from 369.52 million on Wednesday. Declining issues barely outpaced advancers on the New York Stock Exchange.
Investors booked profits in the blue chip sector amid concerns that the market’s run this year may be over, or at least headed for some significant bumps.
Among Thursday’s highlights:
* Banking stocks, for example, which rose sharply last month, came under pressure. J.P. Morgan led the Dow industrials lower and fell 1 to 72 5/8 in late trading.
* IBM tumbled 1 3/8 to 99 3/8, also pushing the Dow industrials lower, in the wake of the resignation of Jerome York as the company’s chief financial officer.
* Technology stocks ended mixed after a strong performance in the morning. Micron Technology rose 3/8 to 87 5/8 in heavy volume on the Big Board. On Wednesday, SoundView Financial Group raised the semiconductor manufacturer’s earnings estimates, saying demand for microchips is running faster than capacity to make them.
* On the NYSE, National Semiconductor advanced 1/8 to 32 1/4, but Texas Instruments dropped 1 1/4 to 77 3/8. In Nasdaq trading, Intel Corp. added 2 1/2 to 65 in leading volume, while Cyrix Corp. advanced 1 3/4 to 41.
“Techs are getting very extended,” said Ricky Harrington, senior vice president and technical analyst at Interstate-Johnson Lane in Charlotte, N.C.
“When the market does correct, techs will correct right along with the rest of the market, though it’s showing no signs of that right now. Earnings projections (for technology companies) are very good. The question is, how much of that favorable outlook is factored into the price.”
* Biotechnology stocks rose after news of advancements on new drugs and treatments. In Nasdaq trading, Immunomedics rose 3/8 to 7 3/4, and Integra Lifesciences added 3/8 to 8.
The market had little reaction to two economic reports released in the morning.
The yield of the Treasury’s main 30-year bond edged up to 6.60% from 6.58% late Wednesday.
In late New York trading, the dollar was quoted at 98.98 Japanese yen, barely up from 98.83 late Wednesday.
In commodities trading, wheat prices soared on a fresh batch of exports and the threat of an early frost nipping the wheat crop before it can be harvested.
Tunisia and Sri Lanka announced purchases of American wheat, and Pakistan is expected to buy shortly. China may also buy, and with Europe maintaining a ban on exports, consuming nations will have to turn to the few remaining suppliers.
Meanwhile, temperatures dipped below freezing for six hours across the Canadian prairies Wednesday night, and could produce scattered frosts in the northern plains. Cooler, drier air could help stamp out crop diseases and dry out wheat in the Dakotas and Montana, where harvesting has been set back by rain. September wheat rose 14.5 cents to $4.70 a bushel.
In overseas trading, London’s FTSE 100 index, which closed at a record level of 3,557.7 on Wednesday, ended 12.1 points lower at 3,545.6.
In Tokyo, stocks finished little changed. The Nikkei average closed up 0.80 point at 17,621.18 after moving in a range between 17,713.53 and 17,511.68.
In Mexico, the Bolsa index ended up 9.84 points at 2,610.93.
