Dow Off 14 as Rally Fizzles on Profit Taking
The Dow Jones industrial average topped 5,700 points Tuesday for the first time on spillover strength from Monday’s big gain, but the rally fizzled on profit taking and heavy selling in tobacco giant Philip Morris.
The Dow ended the day 14.09 points lower at 5,669.51 in a retreat from the previous day’s record close of 5,683.60. Early in the session it had moved as high as 5,709.97.
In the broader market, advancing issues led decliners 1,252 to 1,080 on active volume of 442 million shares on the New York Stock Exchange.
“It’s a catch-your-breath day . . . “ said Bob Stovall, president of Stovall/21st Advisers. On Monday, the blue-chip index soared 99 points to set its 18th record close of the year.
Philip Morris, one of the components of the 30-stock Dow index lost 4 7/8 to 86 3/8, accounting for 15 points of the Dow’s loss.
Tobacco stocks have been under heavy pressure since Liggett Group’s decision last week to settle tobacco lawsuits. On Tuesday of last week, Philip Morris closed at 102 3/8.
The latest wave of selling in tobacco stocks was sparked by news that New York state’s comptroller, the sole trustee of the state’s $70-billion pension fund, ordered a freeze on current holdings of tobacco stocks.
PTI Securities trader Marty Kearney said institutional investors are major stockholders of Philip Morris.
Analysts said they were impressed with the market’s overall performance.
“This is a very good performance,” said Michael Metz, Oppenheimer’s chief investment strategist.
“The market is on a spike and doesn’t give up any ground. It got no help from bonds.”
The 30-year Treasury bond yield rose to 6.71% from 6.70% on Monday.
Bright spots included oil company stocks following a surge in crude oil prices to the highest level since November 1991. April crude oil futures closed up $1.07 at $24.34 a barrel on the New York Mercantile Exchange.
“The strength in oils is based on the breakdown in talks between the U.N. and Iraq, tighter supplies and the highest prices in many, many months,” Stovall said.
Exxon rose 1 3/8 to 82 7/8, Texaco added 1 5/8 to 85 7/8 and Chevron was unchanged at 57.
Meanwhile, the high technology stocks fell after contributing heavily to the market’s recent strength. “High-techs have had a good run over the last few sessions and they are entitled to a little rest,” Metz said.
Among other issues, Digital Equipment fell 2 to 67 1/8. Prudential cut its 1996 earnings estimates for the company.
Among market highlights:
* Airline shares soared after United Airlines’ parent, UAL Corp. said it expected first-quarter results to exceed Wall Street forecasts.
UAL surged 8 7/8 to 213 1/8. AMR, the parent of American Airlines, rose 3/4 to 91 3/4 and Delta Air Lines was up 2 to 81 7/8.
* Xiekon, a Belgium-based digital color printing systems maker, leaped 5 1/8 to 20 1/8 in its first day of trading.
* Irvine-based Trimedyne jumped 6 11/16 to 10 1/8 after the Food and Drug Administration cleared its laser fibers treatment of benign prostatic hyperplasia, a prostate problem.
The Standard & Poor’s composite index of 500 stocks fell 0.96 points to 651.69. The American Stock Exchange index slipped 0.21 points to 564.57.
The Nasdaq composite index fell 1.92 points to 1,112.50.
The Wilshire Associates Equity Index--the market value of NYSE, American and Nasdaq issues--was 6,406.729, down 7.605 points, or 0.12%.
