Stocks Close Mixed as Tech Shares Slump
Stocks ended Monday’s session mixed, after coming under pressure for most of the session from end-of-the-quarter profit taking.
The Dow Jones industrial average rallied in the final minutes to close up 7.22 points at 5,643.86. The blue-chip index rose more than 23 points early in the day, retreated at midmorning to spend most of the session slightly lower, but rallied gently into the close.
Meanwhile, technology stocks slumped on fears that corporate demand for personal computers may be cooling.
Declining issues edged out advancers on the New York Stock Exchange, where volume was light at 334.72 million shares, but above Friday’s sluggish pace.
Broad-market indexes ended mixed. The NYSE’s composite index was unchanged at 348.77 points. Standard & Poor’s 500 stock index fell 0.58 point to 650.04.
The Nasdaq composite index fell 15.13 points to 1,087.09.
With the end of the third quarter this Sunday, investors were anxious to sell good performers in order to mark profits or to unload less-than-stellar names.
“The market’s nervous that there won’t be enough earnings growth to sustain the upward movement in equity prices,” said James Weiss, deputy chief investments officer at State Street Research in Boston.
Leon Brand, a global markets strategist at NatWest Securities, pointed out that the Federal Reserve Board’s Open Market policy committee meets Tuesday.
“No one wants to get in front of that. They know there probably won’t be a cut [in interest rates], but there’s always a comment” from the Fed at these quarterly policy meetings, and that could move the financial markets, Brand said.
Meanwhile, the benchmark 30-year Treasury bond yield ended the day at 6.58%, down from 6.64% Friday.
Bond yields fell even further after the National Assn. of Realtors said sales of previously owned homes shot up 6.5% in February despite bad weather, as buyers took advantage of low mortgage rates.
Among market highlights:
* Computer issues, which had gained a lot lately, were among the most vulnerable to nervous profit taking. Big losers on the Big Board included IBM, down 5 1/2 to 108 3/4; Compaq, down 1 1/8 to 36 5/8; Hewlett-Packard, down 2 3/4 to 94 1/4; and Digital Equipment, down 2 1/4 to 52 1/8.
In Nasdaq trading, Cisco Systems fell 1 1/2 to 43 1/4, Intel lost 1 15/64 to 54 57/64 and Microsoft skidded 1 1/4 to 99 7/8.
Last week, Digital Equipment warned that slower PC sales would drag its first-quarter earnings below analysts’ expectations. “That’s seeping into IBM” and beyond, said Steven Kroll, managing director at Monness Crespi & Hardt.
* The Dow Jones transportation index lost 27.05 points, or 1.23%, to 2,170.62, led by rail issues that had performed well in the last two weeks.
Conrail fell 2 3/4 to 72, Burlington Northern Santa Fe lost 2 1/2 to 82 1/2, Norfolk Southern declined 1 3/4 to 84 5/8 and UAL skidded 2 1/8 to 208.
* Utility and banking issues rose as interest rates fell. The Dow Jones utility index edged up 0.98 point, or 0.46%, to 215.48. Citicorp rose 5/8 to 79 3/4 and BankAmerica added 1 1/8 to 76 7/8.
* Merck fell 1 to 62 1/2 after the company last week warned doctors that some patients had developed potentially serious stomach irritations as a result of using Fosamax, its drug for osteoporosis.
But Eli Lilly shares rallied 1 3/8 to 66 1/4 after Merrill Lynch upgraded the shares to “near-term buy” from “accumulate.”
In overseas stock markets, Tokyo’s Nikkei stock average climbed 1% after a victory of the ruling coalition in local parliamentary elections Sunday boosted hopes that Japan’s political turmoil is stabilizing.
Frankfurt’s DAX index ended a mixed day up 0.3% following regional elections in Germany. London’s FTSE 100 slipped 0.7%
Market Roundup, D8
