Bargain Hunters Steady Stocks; Dow Off 9.98
Stocks ended a wild week with a mixed showing on Friday as some bargain hunters stepped in.
But traders said the mood remained tense and that the market’s sell-off may not be over.
The Dow Jones industrials, off about 30 points in midmorning after Thursday’s 83.11-point slide, ended the day with a 9.98-point loss at 5,510.56.
The broad market was mixed in moderate trading, with smaller stocks generally losing more ground with the Dow. The Nasdaq composite index fell 2.87 points to 1,103.49 after plummeting 34.83 points on Thursday.
For the week the Dow lost 1.4%; the Nasdaq index plunged 4.7%.
On Friday stocks were helped by a bond market rally early in the day, after the government reported that retail sales weakened in June, suggesting the economy may be slowing. But the bond rally faded by day’s end.
The 30-year Treasury bond yield, which dipped as low as 7% at midday, ended at 7.03%, off from 7.05% on Thursday and the lowest since July 3. Analysts said there was some concern in the bond market that the June wholesale inflation report Friday showed a slightly bigger-than-expected rise.
Worries about higher inflation and interest rates in recent weeks had begun to undercut stocks. Then came a barrage of weaker-than-expected corporate earnings reports this week, including downbeat news from technology giants Hewlett-Packard and Motorola.
Now, “everyone’s earnings are being questioned,” said Douglas Myers, a trader at Interstate/Johnson Lane Inc. “Investors are examining everything.”
With profit weakness accompanying the threat of an interest-rate boost by the Federal Reserve Board to soften inflationary pressures, analysts warn that the 5 1/2-year-old bull market faces a sort of double jeopardy.
Earnings reports due next week could well determine whether the market stabilizes or falls further, analysts say. Firms that will report include GM, Coca-Cola and Intel.
Among Friday’s highlights:
* Battered tech stocks were mixed. Intel gained 1 3/4 to 71 1/4 after it said it will slash prices on some of its Pentium chips in August and that it canceled other planned price cuts for the rest of the year, which could help boost profits in the second half.
Elsewhere, Microsoft lost 2 1/8 to 112 3/8, Seagate fell 1 1/8 to 41 1/8 and Ascend Communications fell 3 1/2 to 57 1/8, but Cisco Systems added 5/8 to 55 3/8 and Micron Technology rose 7/8 to 21 3/8. J.R. Simplot, a founding investor of Micron, sold about 25% of his stake Thursday, helping drive Micron down 4 1/8.
* United Healthcare rebounded 2 1/8 to 33 1/8 after sinking 13 1/4 Thursday on a disappointing earnings projection.
* Buyers were attracted to many energy and utility shares, which tend to pay high dividends and thus are considered “safe-haven” stocks. Exxon rose 5/16 to 89 11/16, Texaco gained 1 to 88 3/4 and Bell Atlantic jumped 1 1/8 to 61 3/4.
Market Roundup, D4
Investor Spotlight, D5
