Stocks Mixed as Profit Takers Stop Tech Rally
Stocks ended mixed Tuesday as investors took advantage of an early advance led by technology shares to secure some profits from Monday’s rally.
The Dow Jones industrial average rose 9.31 points to 6,473.25, having retreated from a 48-point gain early in the afternoon.
Broad-market indexes were pulled mostly lower late in the session. The technology-heavy Nasdaq market slipped from Monday’s record finish after surrendering a morning rally on the latest signs of rebounding semiconductor demand.
The early rally “looked like a follow-through to [Monday’s] excitement more than anything else,” said A. Marshall Acuff Jr., market strategist at Smith Barney.
The Dow jumped 82 points on Monday as the market continued to snap back from Friday’s decline, which was triggered by fears that Federal Reserve Board Chairman Alan Greenspan had threatened to raise interest rates to curb investor enthusiasm.
Bond prices were lower throughout the day, pressuring stocks as the yield on the 30-year Treasury edged higher to 6.49% from Monday’s 6.46%.
Analysts attributed some of the bond market’s weakness to caution before Wednesday’s and Thursday’s reports on inflation and retail sales. The markets have been rallying in recent months amid signs that the economy’s growth has slowed enough to keep inflation under control without an interest rate increase by the Fed.
Meanwhile, Deutsche Bank, Europe’s biggest bank, raised $1.1 billion by selling dollar-denominated bonds in the U.S. for the first time.
Computer-related shares stumbled after an early boost from Monday evening’s report that orders for semiconductor chips rose 6.3% in November, pushing a key industry indicator to its highest level in more than a year and giving further evidence that the sector has pulled out of a slump.
The Nasdaq composite index fell 3.72 points to 1,312.55.
The Standard & Poor’s 500-stock index fell 2.27 points to 747.54, and the New York Stock Exchange’s composite index fell 0.79 point to 393.90.
The American Stock Exchange’s market value index rose 0.31 point to 590.79.
Among Tuesday’s highlights:
* The Dow remained in positive territory with the help of Philip Morris, which rose 2 1/8 to 116 3/8, and American Express, which surged 2 7/8 to a record 54 7/8 on hopes that a new arrangement with NatWest will lead to the first bank-issued Amex cards in the U.S.
* IBM, down 2 1/4 to 157 3/4, turned in the Dow’s worst performance.
* Semiconductor stocks, which rose sharply Monday in advance of the book-to-bill report, gave back all or most of Tuesday’s gains by the close. Micron Technology fell 1 1/4 to 33 7/8 and Cypress Semiconductor fell 1/8 to 15 1/2 as the two most active NYSE issues. In Nasdaq trading, Intel fell 1 to 129 1/8 after gaining 3 1/4 points earlier in the day.
Among other tech issues, PC maker Gateway 2000 plunged 5 1/4 to 58 7/8 on lower-than-expected earnings projections, Cascade Communications tumbled 6 5/8 to 61 7/8 and Tellabs skidded 2 3/4 to 42 1/2.
America Online dropped 2 5/8 to 36 after Microsoft, up 1/8 to 81 7/8, rolled out an updated version of its own online service.
* Oil service stocks, among this year’s best-performing industries, tumbled as crude oil futures plunged. Schlumberger dropped 2 1/2 to 100 7/8, Halliburton fell 1 7/8 to 58 1/2, Dresser Industries tumbled 1 1/8 to 31 and Baker Hughes fell 1 3/8 to 35.
Overseas, Tokyo’s Nikkei stock average rose 1.1%, Frankfurt’s DAX index rose 1.2%, and London’s FTSE-100 rose 0.6%.
