FINANCIAL MARKETS : Dow Flirts With Record Before Dip
Blue-chip stocks closed slightly lower Tuesday after an early rally sparked by upbeat economic news came within a fraction of lifting the market into record territory.
But industrial, technology, auto and retail stocks drove down major market indexes in the last hour of trading. One 15-minute round of computer-guided sell orders helped derail the rally.
The Dow Jones industrial average ended 1.09 points lower at 4,755.48. A gain of nearly 40 points early in the day had pushed the Dow just short of its record closing high of 4,802.45 set Oct. 19.
Losers edged winners on the New York Stock Exchange and on Nasdaq. The Nasdaq composite index fell 3.63 points to 1,036.06.
“The market did give us a treat on Halloween and stuck its nose above 4,800,” said analyst Alfred Goldman at A.G. Edwards & Co.
For the month of October, known as a very volatile month for stocks historically, the Dow weathered concerns over corporate earnings, rising consumer loan problems and the federal balanced-budget fight, ending with a net loss of just 34 points.
On Tuesday, the market seemed buoyed initially by a slew of positive economic reports, including a stronger-than-expected Chicago purchasing managers index, which showed that manufacturing activity rebounded sharply in October in the Chicago area.
Also, September single-family new home sales rose an unexpectedly strong 3.3%, the government said.
Meanwhile, another government report showed wage increases remain extremely low, dampening inflation concerns.
Combined, the reports helped spark a modest rally in the bond market and attract buyers to industrial stocks.
News that Quebec voters decided not to separate from Canada boosted the U.S. dollar, also aiding bonds and stocks.
Still, the stock market couldn’t hold its gains, and profit takers took control late in the day.
“The market keeps churning in here because it can’t seem to make up its mind about the status of the economy six to nine months out,” said Edward Laux, senior managing director for equity trading at Chicago Corp.
Some analysts are worried about a protracted fight between the White House and the Republican Congress over a balanced-budget plan and the nation’s debt ceiling.
President Clinton was expected to meet congressional leaders today to discuss the increasingly critical question of raising the nation’s debt limit. Some Republicans are vowing to refuse to boost the debt limit--possibly throwing the country into technical default--unless Clinton signs the Republican budget plan.
Among Tuesday’s highlights:
* Industrial issues losing ground after early rallies included AlliedSignal, off 1 to 42 1/2; Ford, down 7/8 to 28 3/4; Georgia Gulf, down 7/8 to 33 1/8, and USX-U.S. Steel, off 1/2 to 29 7/8.
* Key tech stocks also fell. Hewlett-Packard lost 3 3/8 to 92 5/8, Micron Technology fell 2 to 70 1/2 and Seagate dropped 2 to 44 5/8.
* Retail stocks closing lower included Circuit City, down 1 1/8 to 33 3/8; Tandy, off 2 1/8 to 49 3/8, and Dayton Hudson, off 1 3/4 to 68 3/4.
* On the plus side, some biotech issues rallied. Biogen rose 2 1/2 to 61 1/4, Genzyme gained 2 7/8 to 58 1/4 and Chiron jumped 3 to 91.
* Viacom Class A shares gained 2 3/8 to 49 3/4 after the entertainment giant posted better-than-expected quarterly earnings.
In foreign trading, Mexico’s Bolsa stock index reversed after Monday’s 103-point rally, falling 46.63 points to 2,302.01 as the peso slipped again.
