Stocks Rise but Investors Wary Before New Data
Stocks rose Monday, but they retreated from a stronger rally as investors remained hesitant before this week’s economic reports and next week’s Federal Reserve Board meeting on interest rates.
The Dow Jones industrial average rose 12.56 points to 5,717.79, down from an afternoon gain of about 37 points. The barometer of 30 big U.S. companies has now advanced for four straight sessions, rebounding by nearly 90 points from its recent slump on inflation and interest rate uncertainties.
Broader measures finished higher but also retreated from the session’s highs in the absence of firmer convictions about the economy and earnings.
A flurry of new economic readings is scheduled for this week, including reports on consumer confidence, home sales, durable goods orders and overall economic growth.
However, in recent weeks, new reports have spurred far less market movement than in the winter and spring, with many investors preferring to await the Fed’s interpretation of the latest data.
There is considerable concern that when Fed policymakers meet Tuesday and Wednesday, they will raise short-term lending rates as a preemptive strike to thwart inflationary pressure.
The resulting increase in borrowing costs and slowdown in consumer activity could hurt corporate profits.
Many analysts attributed Monday’s advance to technical factors following Friday’s quarterly expiration of stock-related options and futures contracts, which typically creates an unusual surge in activity. On Monday, trading resumed the sluggish pace of recent weeks.
Advancing issues outnumbered decliners by a 4-3 margin on the New York Stock Exchange, where volume totaled 333.82 million shares, down sharply from Friday’s 516.41 million.
The NYSE’s composite index rose 0.99 point to 358.01, the Standard & Poor’s 500-stock index rose 2.01 points to 668.85, and the American Stock Exchange’s market value index rose 0.19 point to 585.14, snapping a nine-session losing streak.
The Nasdaq market continued to recover from its recent slide as key technology issues further recovered from worries about slack demand in the computer industry. The Nasdaq composite index rose 7.46 points to 1,182.90.
“The whole thing reminds me of January, when we had overblown expectations for technology,” said Peter Canelo, chief investment strategist at Dean Witter Reynolds. “Everyone panicked, everybody cut estimates, and when they reported, it was better than the gloomsters had said.”
Among Monday’s highlights:
* Intel rose 2 15/64 to 73 39/64 as the Nasdaq’s most active issue. But for the second time in a week, an Intel rival plunged after announcing it would lose money this quarter. Cyrix shares fell 5 3/4 to 16 on late Friday’s announcement.
* Consumer companies were among the day’s best performers. The Dow average’s biggest gainers included Philip Morris, up 1 3/8 to 104 5/8; Coca-Cola, up 1 1/8 to 48 3/4; and Procter & Gamble, up 3/4 to 91 1/2.
* USA Waste Services said it is buying Sanifill Inc. in a $1.6-billion stock deal. USA Waste rose 1 to 28 7/8 and Sanifill slipped 3/8 to 47 1/2.
* Laser Industries gained 1 1/2 to 17 3/8 after it said the Food and Drug Administration cleared its EpiTouch laser for tattoo removal.
* ValueJet gained 1 5/16 to 8 15/16. Its chief executive, Robert Priddy, told the Wall Street Journal that he is optimistic that the grounded airline can resume operations in 30 to 60 days.
* Neozyme II dropped 4 3/4 to 46 1/4 and NABI shed 2 3/16 to 8 15/16. The companies said they halted a trial for a drug for treating a symptom of cystic fibrosis after interim data showed it was not effective.
Overseas, Tokyo’s Nikkei stock average rose 0.3%. Frankfurt’s DAX index rose 1.0% and London’s FTSE-100 fell 0.3%.
Market Roundup, D8
