Blue-Chip, Tech Stock Rally Takes Slight Pause
Stocks edged lower in choppy trading Thursday as the November rally paused amid some profit-taking in bellwether technology names and other blue-chip shares.
The Dow Jones industrial average fell 11.55 points to 6,418.47, marking only the second time in 14 sessions that the blue-chip barometer has declined. The Dow, which on Wednesday crossed the 6,400 mark for the first time, started the day with a small gain, but fell more than 36 points by late morning before recovering. Bond prices fell.
Broad-market indexes were mostly lower, with the technology-laden Nasdaq market showing the widest loss. Still, analysts found it encouraging that the selling pressure was fairly modest after this month’s surprisingly sharp advance.
“It’s a pause which everyone was expecting at one point or another. It’s healthy for the market to go sideways and consolidate after such a nice move,” said Robert Freedman, chief investment officer for John Hancock Funds in Boston.
Computer-related shares struggled following Wednesday’s late binge of profit-taking. IBM, a driving force behind the Dow’s advance since last Friday, shook off some morning weakness, rising 1 3/8 to 154. But among the Nasdaq’s big technology issues, Intel fell 2 to 118 7/8 and Microsoft fell 2 7/8 to 150 3/8.
Stocks continued to take their lead from the bond market, which meandered through the session before turning lower in the afternoon and lifting interest rates from late Wednesday’s eight-month low.
Treasury bonds started the day higher after the Labor Department reported that the number of American workers filing first-time claims for jobless benefits unexpectedly shot up by 17,000 last week to 344,000, the highest level since July. Many analysts had expected a much smaller increase in the report, which reinforced a stream of other recent data suggesting that slowing economic growth has helped contain various inflationary threats.
As bond prices rose, the yield on the 30-year Treasury bond dipped toward 6.38%, down from late Wednesday’s 6.40%. However, by late afternoon, the yield rose to 6.41%.
Advancing issues were even with decliners on the New York Stock Exchange, where volume totaled 468.70 million shares, down from 489.40 million Wednesday.
The Standard & Poor’s 500-stock index fell 1.23 points to 742.72, and the NYSE’s composite index fell 0.55 point to 392.25. Both measures closed at record highs Wednesday.
The Nasdaq composite index fell 6.87 points to 1,258.07, and the American Stock Exchange’s market value index rose 0.57 point to 587.76.
Among Thursday’s highlights:
* The Dow’s biggest decliners included Caterpillar, which fell 1 1/4 to 77 1/2, giving back part of Wednesday’s 4 3/4-point rally on an upgrade from Smith Barney. Coca-Cola fell 1 to 50 5/8 after some comments Wednesday by Chairman Robert Goizueta sparked fears the soda maker wouldn’t meet earnings expectations. Coke quickly emphasized that the comments weren’t meant as a forecast.
* Boeing, benefiting from news that American Airlines will buy 103 Boeing jets by 2001 and has the right to buy an additional 527 by 2018, rose 1 1/8 to 97 1/2. United Technologies rose 7/8 to 134 1/4 on the news, which could mean a big order for its Pratt & Witney engines.
* Olsten fell 5 3/8 at 14 1/2 after the temp-placement company said fourth-quarter profit will be hurt by competition. Shares of its rivals also fell. Manpower dropped 3/4 to 31 1/8, AccuStaff fell 2 1/4 to 21 1/4, Interim Services fell 3 1/8 to 36 and Robert Half International declined 2 3/8 to 35 7/8.
* Texaco lost 1 to 98 7/8 after the city of Philadelphia’s pension board voted to divest $5.5 million worth of Texaco stock, citing evidence of racial bias at the company.
* Woodland Hills-based Panavision, a designer and maker of high-precision film camera systems, climbed 3 to 20 in its Wall Street debut.
* Health-care shares rallied. Bausch & Lomb rose 2 1/4 to 35 1/2 on speculation that the company could be the target of a $48-a-share bid from Johnson & Johnson, which gained 3/4 to 52 1/8. Bristol-Myers Squibb rose 1 1/8 to 110 3/8 and Eli Lilly rose 1/2 to 74 after Smith Barney reiterated the stock was a “buy.”
* Marvel Entertainment Group fell 1/4 to 2 5/8. Bondholders said they were told by Marvel’s biggest shareholder that the company will run out of cash in three weeks and needs $15 million immediately to pay its bills.
Elsewhere, Mexican stocks fell for a fifth day to their lowest levels in two weeks as concern about future company earnings outweighed optimism generated by stronger-than-expected third-quarter economic growth. The Bolsa index dropped 38.12 points, or 1.14%, to 3320.04, its lowest level since Nov. 7.
In other overseas markets, Tokyo’s Nikkei stock average fell 0.2%, Frankfurt’s DAX index fell 0.1% and London’s FTSE-100 fell 0.2%.
In the commodities markets, natural gas futures prices posted record highs for a second day on the New York Mercantile Exchange on concerns about winter shortages as inventories continue to fall at a time they should be rising.
Natural gas for December delivery rose above $4 for each 1,000 cubic feet for the first time since the futures began trading on the Merc in April 1990. Prices later settled up 12.3 cents, at $3.75 for each 1,000 cubic feet.
Heating oil futures rose amid weather forecasts calling for temperatures in the Northeast to dip below normal through next week.
December heating oil rose 1.76 cents to 73.85 cents a gallon; December unleaded gasoline rose 1.65 cents to 67.04 cents a gallon; January crude rose 51 cents to $23.84 a barrel.
