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 industrials rose 9.31 points to 6,473.25, adding to Monday’s 82-point surge. But the Dow had been up as much as 48 points early Tuesday afternoon.
Many broad market indexes closed slightly lower on the day, although winners still outnumbered losers by slim margins on the New York Stock Exchange and on the Nasdaq market.
Elsewhere, in the bond market, yields rose modestly in advance of today’s report on November wholesale inflation. The 30-year Treasury bond yield closed at 6.49%, up from Monday’s 6.46%.
On Wall Street, analysts said the market’s reversal in late afternoon looked like old-fashioned profit taking, especially in sectors that have been particularly hot lately.
“People were selling into the strength,” said Richard A. Dickson, a technical analyst at Scott & Stringfellow Inc. in Richmond, Va.
Stocks have been buffeted over the past two weeks by bouts of heavy selling, including Friday’s plunge after Federal Reserve Board Chairman Alan Greenspan warned about potential “irrational exuberance” in financial markets.
But many investors still believe the best place to be is in stocks, assuming the economy continues to grow modestly and interest rates remain fairly subdued.
“I’m not afraid to be in the market right now,” said Kurt Feuerman, a money manager who has close to all his $3 billion at Morgan Stanley Asset Management Inc. invested in stocks. “The financial underpinnings are very positive.”
Among Tuesday’s highlights:
* Tech shares bore the brunt of the afternoon sell-off. Gateway 2000 tumbled 5 1/4 to 58 7/8 after the personal computer maker said the rate of increase in sales this quarter from the third quarter won’t be as strong as a year earlier.
Also sliding were IBM, down 2 1/4 to 157 3/4; Compaq, down 2 1/8 to 83 5/8; and Apple, off 1/2 to 24 1/2.
* Computer chip makers also were lower after rallying Monday in advance of a positive industry report on chip sales trends in November. Intel dropped 1 to 129 1/8 after trading at a record 133 3/8. Also falling were Micron Technology, down 1 1/4 to 33 7/8; Vitesse, down 3 1/16 to 45 1/16; and Cirrus Logic, off 1 1/4 to 19 1/4.
* Other tech losers included Komag, down 5 7/8 to 27 1/4 after warning that this quarter’s earnings will be below expectations because of disk-drive production problems; Cascade Communications, down 6 5/8 to 61 7/8; and Bay Networks, down 1 1/4 to 23 1/4, also on an earnings warning from the company.
* On the plus side, the Dow was boosted by Philip Morris, which surged 2 1/8 to 116 3/8, continuing its climb. Also, American Express leaped 2 7/8 to 54 7/8 on vague takeover rumors. The company had no comment.
* Oil service stocks, among this year’s best-performing industries, tumbled as crude oil futures plunged anew. Crude futures on the New York Merc slid 88 cents to $24.42 as Iraq reopened a pipeline--although neighboring Turkey said no oil arrived--to resume oil exports after a six-year halt.
In the oil sector, Schlumberger dropped 2 1/2 to 100 7/8, Halliburton fell 1 7/8 to 58 1/2 and Baker Hughes lost 1 3/8 to 35.
* Among Southland issues, apparel maker Cherokee rose 7/8 to 6 1/2 after saying earnings in its latest quarter will be sharply above year-ago results.
In foreign trading, most world markets continued to rebound after diving with the U.S. market last Friday.
