Lower Rates, Bargain Hunters Steady Stocks
Lower interest rates and some bargain hunting helped steady the stock market Friday as most indexes reversed course to avert a continuation of Thursday’s frightening slide.
The Dow Jones industrial average fell 9.98 points to 5,510.56, having recovered from a midday slide that threatened to give the blue-chip average its third loss of more than 50 points in six sessions.
Some broad indexes rose. The New York Stock Exchange composite index rose 0.20 points to 346.84, the Standard & Poor’s 500-stock index rose 0.52 points to 646.19, and the American Stock Exchange’s market value index rose 0.68 points to 549.77. But the Nasdaq composite index, which tumbled nearly 35 points on Thursday, lost 2.87 points more on Friday, at 1,103.49. The technology-laden Nasdaq, beset by a series of negative earnings outlooks from computer-related businesses, has now slid more than 11.5% since setting a record high at 1,249.15 on June 5.
As for stocks overall, “We’ve had this mentality of buying the dips, but I think that mentality has played itself out,” said Steven Goldman, market strategist at Weeden & Co. of Greenwich, Conn. “Stocks are about as pricey as they can get. There’s little room for moving off the consensus mark” in corporate earnings or economic data.
Bond prices were bolstered by government reports showing that wholesale prices rose a moderate 0.2% in June and that retail sales fell for the second time in three months. The reports raised hopes that inflationary pressures are such that the Federal Reserve Board need not raise interest rates at its next rate-policy meeting.
The yield on the 30-year Treasury bond, a key determinant of corporate and consumer borrowing costs, briefly moved below 7%, then settled at 7.03%. That compares with 7.05% late Thursday.
As stocks rebounded, advancing issues managed to finish with a slim lead over declining issues on the NYSE.
A flood of earnings reports await traders beginning next week, including ones from General Motors, Coca-Cola and Intel.
Among Friday’s highlights:
* United HealthCare, though hit hard Thursday, regained some amid bargain hunting, rising 2 1/8 to 33 1/8.
* Intel, the most active issue in composite trading, rose 1 3/4 to 71 1/4. The company said it will slash prices on some of its Pentium microprocessors in August but that it canceled other planned price cuts for the rest of the year, which will help boost profits in the second half.
* After falling to a 52-week low on Thursday, Micron Technology shares regained 7/8 at 21 3/8 after it was reported that J.R. Simplot, a founding investor, sold about 25% of his stake at distressed prices to reduce his exposure under a securities loan.
Overseas, Tokyo’s Nikkei-225 stock average fell 1.08%, Frankfurt’s DAX index fell 1.2%, and London’s FTSE-100 fell 0.6%.
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Market Roundup, D4
