Dow Gains 51.57 as Tech Issues Fall Off
The Dow Jones industrials surged in the final minutes of trading Tuesday as investors shifted out of troubled technology stocks and ran to the relative safety of the blue-chip market.
Meanwhile, the dollar continued to advance, mocking industrialized nations’ suggestion last weekend that the currency should stabilize.
On Wall Street, the Dow index ended up 51.57 points at 6,858.11, reversing the previous session’s loss of 49 points.
Broader stock indexes turned mostly higher late in the session too, with the Standard & Poor’s 500 and the New York Stock Exchange composite indexes gaining just enough to close at new highs.
But smaller-company indexes ended lower, with the Nasdaq composite index losing 3.83 points to 1,331.51, weighed down again by profit taking in technology issues.
The late rally among blue chips saw mutual fund traders flock to many of the big-name stocks that have driven the market higher in recent months. Oil shares in particular found support after a weak performance Monday.
But the market’s real test of confidence took place among technology stocks, which suffered a second straight session of stiff selling pressure on concerns about slowing earnings growth.
Late in the day, however, some top names in the sector, notably Intel, finally attracted buyers. Wall Street was nervous after Intel fell early in the session below a key level at 150 and then “dropped like a stone” to 146 1/2, but then, suddenly, the tide turned, analysts said. It closed up 1/8 at 151 3/4.
Overall, advancing issues outnumbered decliners by a 13-12 margin on the NYSE. But losers had a 23-18 edge on Nasdaq.
In the bond market, yields were mostly unchanged as the Labor Department reported that productivity improved at a 2.2% annual rate in the final three months of 1996, the best quarterly gain in three years. That anti-inflationary report helped the yield on the 30-year Treasury bond hold steady at 6.70%.
Also, the Treasury sold new three-year notes Tuesday at an average yield of 5.997%.
Elsewhere, in currency trading, the dollar surged to a 33-month high against the German mark on growing concern about Germany’s economic woes, just days after major industrial nations indicated the U.S. currency had risen far enough.
The dollar rose to 1.6780 marks in late New York trading from 1.6576 marks Monday. Earlier, it had climbed to 1.6803 marks, its highest since May 11, 1994.
The dollar also rose to 123.15 Japanese yen from 122.85 on Monday.
Among Tuesday’s highlights:
* The day’s late surge saw a number of big tech companies reverse losses. IBM rose 2 1/2 to 145 1/4 and Microsoft gained 3/4 to 98 1/2. Also, United Technologies surged 3 to 74 after an upbeat conference call with securities analysts.
* Two of Monday’s most battered tech issues recovered slightly. Computer networker 3Com rose 1/4 to 37 1/2, and rival Cisco Systems rose 2 to 60.
Likewise, Compaq Computer rebounded, vaulting 3 1/8 to 80 1/2.
But Motorola fell 4 to 63 1/2 as the NYSE’s most active issue, after Swedish telecom rival LM Ericsson said it expected continued pressure on its telecommunications product price levels.
* Centennial Technologies, whose stock jumped more than fivefold last year, contributed to the nervousness in the tech sector after it fired its CEO and said it may have to restate its finances. The stock did not open for trading. It closed Monday at 16 1/2.
Also, American Power Conversion slid 4 7/8 to 23 5/8 after the company warned of slowing sales growth.
* Oil stocks were among the Dow’s strongest performers. Chevron rose 2 1/4 to 67 3/8, Exxon gained 1 1/2 to 101 5/8, and Texaco rose 7/8 to 103 3/8.
* Dutch conglomerate Unilever’s American depositary receipts rose 10 to 178 1/8 after it reported a huge rise in fourth-quarter earnings and said it will sell specialty chemicals units.
Overseas, Mexico’s stock market index soared to a record high as the peso strengthened. Mexico City’s Bolsa index surged 70.90 points, or 1.93%, to 3,750.03, its second gain in a row.
The Bolsa’s previous record high was 3,739.59, set Jan. 20. Year-to-date, the index is up 13% in dollar terms.
Market Roundup, D6
