Nasdaq Hits Another High, but Dow Off 29
Bellwether technology shares lifted the Nasdaq market to a third straight record Wednesday, but blue-chip issues slumped again as the latest economic news spurred some profit taking on November’s rally.
The Dow Jones industrial average fell 29.07 points to 6,499.34, giving the red-hot blue-chip barometer its first two-day losing streak in more than a month. Even with the two-day drop of nearly 50 points, the Dow is up about 470 points, or 7.8%, this month.
Broad-market measures finished mixed in the sluggish pre-Thanksgiving session, with the technology-rich Nasdaq composite index and American Stock Exchange market value index both rising.
Stocks started the session lower as the bond market slipped from an early rally that briefly pulled interest rates back down toward their lowest level since early March.
But bonds pulled back amid a flurry of economic data suggesting a faster pace of business activity that could aggravate inflationary pressures such as rising production costs. Higher inflation would make the fixed payments on bonds less attractive.
The Commerce Department reported that orders for big-ticket products unexpectedly edged up 0.1% in October. Meanwhile, a University of Michigan report pointed to improving consumer sentiment going into the holiday selling season, and a survey of Midwestern factory managers suggested increasing manufacturing activity.
The indications of rising consumer demand eroded some of the widespread confidence that the economy is slowing enough to keep the Federal Reserve Board from raising interest rates to keep inflation in check.
“There’s an awful lot of anticipation factored into the slow-growth scenario and a non-Fed intervention environment,” said Ned Riley, chief investment officer for Bank of Boston. “Any announcement to the converse will have an adverse effect on the bond market.”
As bonds rose early Wednesday, the yield on the 30-year Treasury bond fell from late Tuesday’s 6.44% to nearly 6.38%. But soon after the reports, bonds gave back much of their gains, lifting the yield to 6.42% in a shortened day of trading.
Investors are concerned that strong consumer confidence will lead to a surge in holiday spending, increasing the threat that inflation will accelerate.
Advancing issues outnumbered decliners by a 7-6 margin on the New York Stock Exchange, where volume totaled 377.65 million shares as of 4 p.m., down sharply from Tuesday’s heavy pace of 533.46 million.
The Standard & Poor’s 500-stock index fell 0.96 point to 755.00, and the NYSE’s composite index fell 0.50 point to 397.48.
But the Nasdaq composite index rose 6.12 points to 1,287.32, and the American Stock Exchange’s market value index, which is also dominated by technology and smaller-company shares, rose 0.31 point to 588.64.
“This is a sign we could see some broadening in the market,” said James Margard, a fund manager at Rainier Investment Management, with $3.1 billion in assets. While the Dow shot ahead 7.9% this month, the Nasdaq gained only 5.2%.
Among Wednesday’s highlights:
* Among the day’s most active technology issues, Intel rose 2 5/8 to 126 5/8 and Microsoft rose 1 3/4 to 155 1/2. Meanwhile, Texas Instruments rose 2 7/8 to 63 3/4 after an upgrade by Salomon Bros., Motorola. rose 1 7/8 to 55 3/4 and America Online rose 2 1/4 to 34 7/8.
* Philip Morris, which fell 7/8 to 103 7/8, sent stocks into a late-afternoon slide after it and other tobacco companies lost an appeal to the Minnesota Supreme Court, forcing them to disclose unedited cigarette formulas as part of a pending lawsuit.
* Oil shares were among the Dow’s weakest components amid worries that the potential return of Iraqi crude to the world supply would lower prices. Texaco fell 1 5/8 to 98 7/8, Chevron fell 1 1/2 to 66 5/8 and Exxon fell 1 1/8 to 93 3/4.
* Walt Disney, which gave back most of Tuesday’s rally on a strong earnings report, fell 2 1/8 to 73 7/8.
* Armor All Products. rose 1 25/64 to 18 57/64 one day after Clorox said it will buy the company for $408 million in cash. Clorox was unchanged at 105 1/2.
* Among the day’s initial public offerings, Forrester Research rose 6 to 22 after the technology research firm sold 2 million shares. But Firearms Training Systems’ $84-million IPO missed the mark with investors, falling 3/8 to 13 5/8.
* Vacation Break USA rose 6 to 16 3/4 after the time-share company agreed to buy resort developer Berkley Group.
* H.B. Fuller rose 3 to 47 after the specialty chemicals manufacturer was raised to medium-term “buy” from “accumulate” by Merrill Lynch & Co.
Overseas, Tokyo’s Nikkei stock average fell 0.3%, Frankfurt’s DAX index fell 0.5% and London’s FTSE-100 fell 0.5%.
Solidere, Lebanon’s biggest company, made a $77-million international share issue that gave non-Arabs their first chance to invest in the firm’s reconstruction of Beirut’s city center.
The issue was smaller than the expected $115 million to $125 million, but Beirut bankers said they were not discouraged by Solidere’s first venture onto the international market since its initial $650 million share issue in January 1994.
Market Roundup, D6
