Stocks End Modestly Lower After Late Rebound
The stock market finished with modest losses Monday after Wall Street gradually worked off the bulk of a deficit.
The session started somberly with stocks in a retreat that knocked about 40 points off the Dow Jones industrial average in morning action. The Dow remained deeply depressed until the afternoon, when it started digging out of the hole. It ended down 17.16 points at 4,780.41.
Broader measures made similar comebacks and closed well above the session’s worst levels. The New York Stock Exchange composite fell 0.44 points to 312.56 and Standard & Poor’s 500 fell 0.58 points to 582.77. At the American Stock Exchange, the market value index fell 2.71 points to 547.87.
A turnaround by shares of computer chip makers and other selected technology stocks helped reverse the market’s fortunes. This enabled the tech-dominated Nasdaq Stock Market to steady and its composite index closed nearly neutral at 1,050.18, down 0.92 point.
Losing issues outnumbered gainers by about 7 to 4 on the Big Board where volume totaled 326.07 million shares at the end of trading. On Friday, 459.29 million shares changed hands on the NYSE floor amid heavy trading tied to quarterly options expirations.
The selling, which was punctuated by periodic rounds of computer-guided programs in the morning, was not confined to a particular group of stocks. It did not appear tied to an individual news event or report either.
The urge to unload equities occurred as a normal reaction after the market’s impressive gains since late August that have propelled the Dow industrials about 200 points higher.
Market analysts said investment professionals cited economic factors in deciding to collect profits. With the economy’s health considered fragile, there is a worry that its condition could seriously deteriorate if the Federal Reserve Board does not stimulate growth by lowering interest rates.
But the markets are acting as if rates will be left where they are when the central bank’s policy panel meets next week.
“It’s just a little more somber out there. People are looking for and finding excuses to lock in profits,” said Hugh Johnson, chief investment officer at First Albany Corp.
Among Monday’s highlights:
* Stronger technology shares included Micron, which rose 2 3/8 to 88 1/2; International Business Machines, up 2 to 94 1/8; Hewlett-Packard, up 1 1/8 to 81 3/8, and Intel, up 3/4 to 62 7/8.
* Economically sensitive shares that remained weaker were Alcoa, off 1 3/8 to 55 1/8 and General Motors, off 1/2 at 47.
* PepsiCo continued to build on its recent rally amid the prospects of strong earnings. It ended up 1 3/8 to 51 1/8 after touching a 52-week high of 51 1/4.
* Merck also set a new high for the year, rising 1 1/8 to 54 1/4.
* Among individual issues, Caldor tumbled 1 1/2 to 3 3/4 after the Northeastern discount retailer filed for Chapter 11 bankruptcy protection, citing a downturn in sales and a decline in trade support.
* Summit Tech rose 3 3/4 to 49. The company said it received an approvable letter from the Food and Drug Administration for its excimer laser to treat nearsightedness.
* Mobil fell 2 10/64 to 101 6/64 after a brokerage house downgraded the stock.
* Nike class B shares climbed 7 to 99 1/2. The company reported sharply higher fiscal first-quarter earnings and said its board of directors approved a two-for-one stock split.
* Amgen lost 2 1/16 to 47 13/16. Cowen downgraded the stock to buy from strong buy.
A government economic report offered nothing to steer Wall Street one way or the other. Data from the Commerce Department on business inventories deviated only slightly from expectations so it aroused a muted response in the stock or bond markets.
The report said business inventories rose 0.3% in July, the 16th straight increase but the smallest advance in seven months.
Selling in the bond market, which pushes prices lower and interest rates higher, represented profit-taking after recent gains. The yield of the main 30-year Treasury bond rose to 6.53% from 6.48% Friday.
In late New York trading, the dollar ended at 103.35 yen, down from 104.07 yen Friday. In late-afternoon trading Friday, the dollar hit 104.15 yen, its highest level since June 9, 1994.
In commodities trading Monday, frost forecast in the Midwest for later this week drove corn and soybean prices higher as traders feared the early cold snap may put a premature end to the growing season.
November soybeans rose the maximum 30 cents to $6.6175 a bushel, and the market posted its highest levels since June 30 at the Chicago Board of Trade.
December corn rose 10.75 cents to $3.145 a bushel.
Overseas action set a negative tone for Wall Street. A selloff in Tokyo, during which the 225-issue Nikkei index slumped 439.39 points to close at 18,319.16, was a negative.
In Mexico, the Bolsa index slipped 24.15 points to 2,541.92 despite regaining some ground in late trading.
