Stocks Ease Off Highs as Tech Shares Slump
Blue-chip stocks eased Friday from Thursday’s record highs, as financial and technology shares slumped.
In the bond market yields rose sharply after Federal Reserve Board Chairman Alan Greenspan hinted that the central bank may not trim interest rates again any time soon.
On Wall Street the Dow Jones industrial average lost 7.59 points to 4,794.86, after rising 24.93 points to a record 4,802.45 Thursday. For the week the Dow added 1.08 points.
The broad market was mixed Friday. Losers outnumbered winners by about 7 to 5 on the New York Stock Exchange, but winners had a slight edge on Nasdaq. Most broad indexes closed lower.
“There’s a little concern or cautiousness that the market only limped to a record [Thursday] on poor breadth,” said Joseph DeMarco, head trader at HSBC Asset management in New York.
That softness in the market’s tone contributed to some investors’ willingness to take profits Friday, as bond yields rose.
The yield on the 30-year Treasury bond jumped to 6.35% from 6.30% Thursday after Greenspan warned late Thursday that the Fed must continue to be vigilant against inflationary pressures.
Greenspan warned economists in Chicago against assuming that increasing global competition and productivity advances are “permanently suppressing” inflation rates.
Tony Crescenzi, head of fixed-income trading at Miller, Tabak, Hirsch in New York, viewed Greenspan’s comments as an indication that “the Fed is not committing to lowering interest rates right now.”
Many bond market players had been expecting the central bank to cut short-term rates again in November.
Concern about rates weighed on financial stocks. Meanwhile, technology issues--extremely volatile lately--were hit by renewed earnings jitters.
Among Friday’s highlights:
* In the financial sector American Express lost 1 1/2 to 41 1/2, NationsBank dropped 1 3/4 to 70, Citicorp gave up 1 1/2 to 65 7/8, Salomon sank 1 1/2 to 36 7/8, Merrill Lynch lost 2 1/8 to 57 3/8 and Franklin Resources was off 1 3/8 to 53 7/8.
Also, Wells Fargo shares dipped 5 5/8 to 222 3/4 as some investors took profits, awaiting Wells’ next move after launching a hostile bid for First Interstate on Wednesday. First Interstate eased 2 1/8 to 137 3/4.
Bankers Trust tumbled slid 3 1/8 to 64 7/8 after the company reported a drop in earnings and a top management change.
* Among tech shares Silicon Graphics fell 1 3/4 to 32 1/4 after reporting earnings slightly below expectations.
Also, computer chip maker LSI Logic dropped 5 1/2 to 49 1/2. Its quarterly results beat analysts’ expectations, but research firm SoundView Group unnerved some investors by cutting future earnings estimates.
Other tech shares losing ground included IBM, down 2 7/8 to 95 3/8; Digital Equipment, down 3 1/8 to 51 3/4; Micron Technology, off 3 1/2 to 69 3/8; Hewlett-Packard, down 4 to 88 3/4, and Peoplesoft, off 6 1/4 to 85 1/2.
* Consumer growth stocks turned mixed after a big rally on Thursday. McDonald’s added 1 to 41 1/2 and Clorox gained 2 to 72 1/2, but Gillette fell 7/8 to 48 7/8 and Hershey Foods sank 4 to 62 3/4 after reporting earnings.
* Among new stock issues, Studio City-based Jerry’s Famous Deli sold 2.1 million shares at 6. The stock won’t begin trading until next week on Nasdaq, however.
In overseas trading, London’s FTSE-100 stock index slumped 27.2 points to 3,551.4. In Tokyo the 225-share Nikkei average ended up 201.97 points at 18,157.33.
In Mexico City the Bolsa index fell 22.15 points to 2,329.42.
In currency markets the dollar ended at 100.35 Japanese yen in New York, down from 100.45 Thursday. The dollar dropped more sharply against European currencies as fresh political turmoil sent traders scurrying into German marks.
Market Roundup, D3
