Stocks End Mostly Lower; Some Tech Issues Rebound
Wall Street suffered another generally losing session on Wednesday, although some blue chips gained.
The Dow Jones industrials rose 20.32 points to 5,648.35 as some investors appeared to reach for higher-quality issues amid the continuing sell-off of smaller stocks.
But the Dow was nearly alone in the plus column. The Nasdaq composite index of mostly smaller stocks, which plunged 2% on Tuesday, eased 3.81 points, or 0.3%, on Wednesday to 1,179.27, even though some technology stocks rebounded.
Investors have been dumping tech stocks in particular and smaller stocks in general over the last week, apparently concerned about the outlook for second-quarter corporate earnings.
A number of tech firms in recent days have warned about weaker results. There was more bad news after the market closed Wednesday: Software firm Broderbund reported lower earnings for the quarter ended May 31, and disk-drive component maker Read-Rite warned of lower results for the current quarter.
Wall Street had rallied early in the day, as the Federal Reserve Board reported continuing moderate economic growth, and bond yields held steady. The Dow was up nearly 50 points at midday.
But selling pressure revived in the afternoon.
“A lot of people are just pulling to the sidelines and don’t want to play,” said Larry Rice, chief investment officer at Josephthal, Lyon & Ross. “Until bond yields fall below 7%, I don’t see how stocks can make any meaningful advance.”
Traders said some investors also are hesitant ahead of Friday’s “triple witching,” the simultaneous quarterly expiration of stock index futures, index options and individual stock options. Such expirations can cause extreme market volatility as traders close out complicated trades.
Declining issues outnumbered advancers by 14 to 10 on the New York Stock Exchange and by 22 to 16 on Nasdaq. Volume remained moderate.
Even though some blue chips gained, the Standard & Poor’s 500 index fell 0.10 point to 661.96, the eighth straight decline.
The Russell 2,000 index of smaller stocks dropped 0.5% to 347.20, leaving it 4.8% below its recent record high.
Among Wednesday’s highlights:
* The Dow was helped by Boeing, which rose 1 5/8 to 84 3/4 after saying it will boost plane production; Procter & Gamble, up 2 1/8 to 89 7/8; and Goodyear, up 1 to 48 7/8.
* In the tech sector, Broderbund was unchanged at 31 1/2 and Read-Rite lost 1 3/16 to 15 3/16 ahead of their respective announcements.
Among other tech issues, Intel added 1 to 71 3/8, Compaq gained 1 to 47, FileNet jumped 3 3/4 to 39 1/4, Iomega rebounded 3 3/8 to 30 1/8, Dell rose 2 5/8 to 54 1/8 and Computer Sciences added 1 5/8 to 74 3/4.
Also, Sun Microsystems rose 2 to 59 after Morgan Stanley added the stock to its “buy” list.
* Some recent tech-related high-fliers continued to slide in profit taking. Diana plunged 7 1/2 to 68 3/4 and Presstek lost 5 3/4 to 50 1/4.
* ValuJet rose 3/4 to 7 1/4 after plunging 35% Tuesday, as the airline suspended operations at least temporarily.
* Some industrial shares gained, including Georgia-Pacific, up 1 3/4 to 75 1/8; Phelps Dodge, up 1 3/8 to 66 1/4; and Caterpillar, up 3/8 to 66.
* Exide soared 4 7/8 to 24 7/8 after the battery maker’s chief executive denied accusations in the weekly business publication Barron’s that it has lax management and accounting practices.
Meanwhile, in U.S. commodities trading, hog and pork prices fell sharply again Wednesday as the market was stung once more by the month-long slowdown in supermarket pork sales.
In currency trading, the dollar climbed against the German mark Wednesday amid hopes that interest rates in Germany are headed lower, but fears that Japan will eventually raise interest rates limited gains against the yen.
In late trading, the dollar rose to 1.5216 marks in New York from 1.5124 on Tuesday, while edging up to 107.85 yen from 107.75.
In Tokyo, the Nikkei-225 stock index closed with a gain of just 34.96 points to 22,367.36, despite the government’s Tuesday report of a sharp acceleration in first-quarter economic growth. Investors fear that a pickup in the economy might force the Bank of Japan to raise rates.
Early today, Japanese bond yields jumped after Kyodo News reported the central bank has started to review its financial policy based on its judgment that the nation’s economy has entered a steady recovery phase.
Market Roundup, D6
