TECHNOLOGY AND MARKETS : Markets Finish Mixed As Budget Hopes Rise
Buyers turned what looked like another sour day on Wall Street into a mixed finish, after Congress and President Clinton showed some movement toward a balanced-budget deal.
The Dow Jones industrials, off about 40 points in the afternoon, ended with a gain of 7.59 points at 5,181.43.
In the bond market the bellwether 30-year Treasury bond yield finished the day at 6.04%, up from 6.03% on Thursday but below the afternoon high of 6.08%. Even so, the day’s closing yield was the highest since Dec. 26, reflecting investors’ mounting concerns about the political bickering in Washington.
On Thursday, fears that Congress and Clinton were headed toward another stalemate in budget talks had helped spark a late sell-off on Wall Street, driving long-term interest rates sharply higher and pushing stocks broadly lower.
Worries about slowing corporate earnings growth, especially at technology firms, also weighed on stocks Thursday.
But on Friday buyers returned to many beaten-down tech stocks, and to stocks and bonds generally, after the House voted overwhelmingly to reopen the government rather than continue to hold federal workers hostage to budget negotiations with Clinton. That stoked some optimism about an ultimate budget pact.
The markets’ reaction Friday suggested that “if they come up with a solution to the budget and remove that uncertainty, stocks will break out to new highs rather quickly,” said Arthur Micheletti, investment strategist at Bailard, Biehl & Kaiser in San Francisco.
Still, a continuing problem for stocks in the near term is fear of disappointing corporate earnings, amid a sluggish economy.
Software firm Adobe Systems plunged 16 1/4 to 42 1/4 on after it warned of weak quarterly results. And battery-maker Duracell sank 3 7/8 to 47 7/8 after it also forecast lower-than-expected quarterly results, blaming weak holiday sales.
Yet despite Adobe’s warning--the latest in a long string of earnings warnings from tech firms over the past month--the technology-heavy Nasdaq composite index gained 3.65 points to 1,033.47, as bargain-hunters moved in.
In the broad market, declining issues had only a slight edge over winners on the Big Board.
Among Friday’s highlights:
* Tech stocks rebounding after recent heavy losses included IBM, up 1 3/4 to 88 5/8; Digital Equipment, up 2 1/4 to 58; Apple Computer, up 2 11/16 to 34 1/4; Computer Associates, up 3 1/4 to 56 1/8; and Seagate, up 2 3/8 to 48 3/8.
* Buyers also sought some energy and gold stocks, reflecting recent price gains in those commodities. Exxon jumped 2 to 83 3/8, Mobil leaped 2 3/4 to 117 7/8, Unocal gained 1/2 to 29 7/8, American Barrick added 1/2 to 28 3/8 and Hemlo Gold was up 3/8 to 10 5/8.
February gold futures closed up $1.10 to $396.50 on the Comex on Friday after rising as high as $399.20--nearing the psychologically important $400 level.
* On the downside, profit takers hit some consumer-growth stocks that had led the market recently. Nike fell 2 1/8 to 66 1/8, Philip Morris sank 2 1/8 to 89 3/4 and Gillette lost 7/8 to 53 1/2.
