Dow Dips 4.33; Nasdaq Hits 9th Straight Record
The Nasdaq market of mostly smaller stocks extended its string of record highs to a ninth session Tuesday, while blue-chip stocks edged lower as bond yields jumped on signs of economic strength.
Elsewhere, rain in the Farm Belt and emergency government sales of crude oil from strategic reserves to cap soaring gasoline prices sent grain and petroleum prices sharply lower.
On Wall Street the Nasdaq composite index added 2.32 points to a new high of 1,190.52. The Russell 2,000 index of smaller stocks also eked out a record high.
The blue-chip Dow industrials, meanwhile, slipped 4.33 points to 5,569.08.
In the broad market, declining issues led advances 1,187 to 1,146 on moderate volume of 393 million shares on the New York Stock Exchange.
Some analysts were surprised at the stock market’s resilience, given the jump in bond yields.
Signs of rising consumer confidence helped push the yield on the bellwether 30-year Treasury bond to 6.90%, up from 6.84% on Monday and the highest since April 11.
Another indicator of strength: The regional Chicagoland Business Barometer, which foreshadows today’s National Assn. of Purchasing Management report for April, rose to a seasonally adjusted 52.0% from 47.3% in March, which was more than analysts’ forecast of 49.8.
The government reports Friday on the April jobless rate, and the data will be closely watched by Wall Street for signs on the direction of the economy and interest rates.
“Both the bulls and bears have taken their horns in and we’re waiting for Friday’s employment report. But we’re still in a very equity-friendly environment,” said Scott Bleier, chief investment strategist at Prime Charter Ltd.
Stronger-than-expected jobs reports for February and March worried investors and fanned fears of a pickup in inflation.
Some analysts say investors should stop worrying. “It’s as close to economic nirvana you can get,” said Tom Carpenter, chief economist at ASB Capital Management Inc.
He said the data released thus far has not changed his view that the economy “is doing fine and probably will grow at 2% this year, at noninflationary growth rates.”
Meanwhile Tuesday, the shares of oil companies were hit by profit taking after President Clinton’s decision to sell crude oil from the nation’s strategic reserve put the brakes on the 3-month-old surge in gasoline prices.
On the New York Merc, gasoline for delivery in May sank 4.62 cents to close at 72.39 cents a gallon. June crude oil ended down $1.23 at $21.20 a barrel.
Clinton on Monday ordered the sale of 12 million barrels of crude oil from the strategic petroleum reserve in an effort to bring down gasoline prices ahead of the summer driving season, typically the top consuming period.
Mobil lost 2 3/8 to 115, Exxon fell 7/8 to 7/8 to 85, Texaco shed 1 3/8 to 85 1/2 and Chevron fell 1/2 to 58.
In grain futures trading, prices plummeted for a second day as rain in the Midwest continued to improve crop prospects. Wheat and corn prices had risen to record highs this month as fears about drought fueled a speculative frenzy.
One key commodity price index, the CRB index, dove 3.46 points to 256.09 Tuesday.
Among Tuesday’s market highlights:
* PepsiCo rose 2 1/8 to 63 1/2 on better-than-expected quarterly results, and Cigna gained 4 1/2 to 113 3/8 on its earnings report, but Tech-Sym lost 4 1/4 to 34 5/8 on disappointing earnings.
* Uunet soared 10 1/2 to 58 3/4 after agreeing to merge with MFS Communications in a stock deal valued at $2 billion. MFS rose 1/16 to 34 11/16.
News of the deal boosted the shares of other Internet providers, including PSInet, up 2 3/8 to 14 1/8, Netcom, up 3 3/8 to 35 7/8, and BBN Corp., up 5/8 to 28 1/4.
* Guidant rose 3 to 56 1/8 after winning Food and Drug Administration approval six months sooner than expected for its implantable devices which treat life-threatening rapid heartbeats.
* Biogen rose 2 5/8 to 65 7/8 after a federal judge declined Berlex Laboratories’ request to temporarily block possible FDA approval of Biogen’s AVONEX, a multiple sclerosis drug. Berlex claims AVONEX violates its exclusive marketing status granted by the FDA for its MS drug Betaseron.
* Two initial public offerings posted big gains. Sykes Enterprises, an information technology company, soared 17 1/2 to 35 1/2. Software firm Planning Sciences International surged 8 1/8 to 24 1/8 in its first day of U.S. trading.
