Dow Off 14 in Mixed Market; Yields Flat
The U.S. stock market closed mixed on Tuesday, consolidating after Monday’s surge as some investors stepped back.
Elsewhere, oil futures prices soared again on short-term supply worries, while bond yields were little changed.
On Wall Street, the Dow Jones industrials eased 14.09 points to 5,669.51, after rocketing 98.63 points to a record high on Monday.
“It’s a catch-your-breath day,” said Bob Stovall, president of Stovall/21st Advisers in New York.
In the broad market winners topped losers by 1,295 to 1,090 on the Big Board, but most major indexes fell modestly on the day.
The Dow rose above 5,700 in early trading, continuing Monday’s rally. But fresh selling of tobacco stocks pounded Philip Morris, one of the Dow components, thus undercutting the blue-chip index.
Philip Morris slumped 4 7/8 to 86 3/8, leaving it down 17% from its recent record of 104 5/8. Also tumbling were RJR Nabisco, down 1 3/8 to 29 3/4; and UST, off 1 1/8 to 31 5/8.
Tobacco stocks have been under heavy pressure since Liggett Group’s decision last week to settle tobacco lawsuits--raising fears that other cigarette companies would be forced to follow suit, at heavy financial cost.
What’s more, new allegations contend that Philip Morris manipulates the level of nicotine, the addictive chemical in tobacco products, in its cigarettes.
On Tuesday, New York State’s comptroller, the sole trustee of the state’s $70-billion pension fund, turned up the heat on tobacco stocks by ordering a freeze on current holdings of the stocks.
“Tobacco companies have a problem and it’s not one that is going to go away any time soon,” said Jeffrey Roberts, analyst at Trendline Research in Richmond, Va., which oversees about $55 million. “Once these stocks discount Armageddon, then I’d think about buying them again.”
Meanwhile, bond yields were mostly flat Tuesday despite news that housing starts in February rose at the fastest clip in 14 months. The 30-year Treasury bond yield just inched up, to 6.71% from 6.70% on Monday.
Yields continue to hover near seven-month highs because many bond traders believe the economy is getting stronger. But some analysts said bonds could have fared much worse on Tuesday, given the housing report and another jump in oil prices.
Crude oil futures for current delivery leaped $1.07 to $24.34 a barrel in New York. However, traders said a short-term squeeze in oil supplies isn’t expected to last, and that oil is poised to decline at least somewhat from these levels.
Among Tuesday’s highlights:
* Oil stocks rising with crude prices included Exxon, up 1 3/8 to 82 7/8; Mobil, up 1 3/4 to 115; Unocal, up 7/8 to 33 1/4; Occidental, up 1/2 to 26 1/8; and Texaco, up 1 3/4 to 85 3/4.
* Airline stocks also were strong, even though higher oil prices could mean higher jet fuel costs. UAL, parent of United Airlines, rocketed 8 7/8 to a record 213 1/8 after it said first-quarter earnings will surpass the most optimistic forecast on Wall Street, which is $2.05 a share.
Among other airlines, Delta surged 2 1/8 to 82, Alaska gained 7/8 to 26 7/8 and Northwest leaped 2 1/8 to 54 5/8.
* Some industrial names that would benefit from a stronger economy rose further, including DuPont, up 1 5/8 to 84 1/4; Chrysler, up 1 5/8 to 63 1/2; and Kennametal, up 1 1/4 to 36 3/8.
* On the downside, Walt Disney fell 1 7/8 to 65 after some analysts trimmed 1996 and 1997 earnings estimates on Monday. Pacific Telesis sank 1 1/8 to 26 3/8 on renewed fears that the company’s board will cut the dividend on the stock. The board meets Friday.
In foreign trading, Mexico’s Bolsa index rebounded 129.52 points, or 4.5%, to 3,003.84 from its recent pummeling, as interest rates eased.
