Stocks Slip on Intense Sell-Off of Tech Issues
Stocks slid Wednesday in an intensified sell-off of technology shares and the Dow Jones industrial average snapped a three-day advance, retreating from record levels as investors found few reasons to cast aside worries over interest rates.
The Dow Jones industrial average closed off 45.79 points to 7,039.37, after being down more than 70 points earlier in the session. The drop ended a string of two record closing highs of 7,085.16 on Tuesday and 7,079.39 on Monday.
Shortly after the market closed Wednesday, four of the Dow’s longtime tenants were evicted from the 30-company index: Westinghouse Electric, Texaco, Bethlehem Steel and Woolworth. And beginning March 17, Travelers Group, Hewlett-Packard, Johnson & Johnson and Wal-Mart Stores will take their place.
In the broader market, losers beat winners by more than a 5-to-3 margin on the New York Stock Exchange. The NYSE’s composite index fell 3.52 points to 423.54.
The broad sell-off took down the Standard & Poor’s index of 500 stocks and the technology-laden Nasdaq composite index. The S&P; 500 fell 7.08 points to 804.26, and Nasdaq, pressured by more weakness among leading computer-industry names, declined 12.63 points to 1,304.13.
Broader indicators had posted fairly modest losses until interest rates started rising in the bond market at midafternoon. Bellwether technology shares continued to struggle.
Bonds had traded nearly unchanged most of the day until the Federal Reserve released its “beige book” report on regional economic conditions. The report showed that the economy’s surprising vigor has continued to create jobs, but that the resulting competition for workers hasn’t led to pronounced wage increases--a key force behind inflation.
The news temporarily helped lift bonds. As bond prices improved, the yield on the 30-year Treasury bond edged to 6.88% from late Tuesday’s 6.85%.
But some bond traders sold into the strength, trying to insulate themselves from potential jolts in today’s report on retail sales activity and Friday’s reading on wholesale prices.
The beige book will serve as the basis for a Fed meeting later this month on the central bank’s interest rate strategy. The Fed took no action at the last policy meeting in late January, but with economic readings regularly coming in stronger than expected, many investors are concerned the central bank is poised to raise interest rates for the first time in two years.
Among Wednesday’s highlights:
* Many of the day’s big losers were steady earners that are more popular when economic doubts prevail. The Dow’s four biggest decliners were Disney, down 1 3/4 to 75 3/8; Philip Morris, down 1 5/8 to 138; Merck, down 1 5/8 to 92 1/4; and Procter & Gamble, down 1 1/2 to 125 1/2.
The Dow’s two biggest gainers, by contrast, were retailers, which are more dependent on economic prosperity: Sears rose 1 1/8 to 56 5/8, and Woolworth rose 5/8 to 23. Also, Wal-Mart Stores, which joins the Dow next week, rose 3/4 to 28 1/2, Gap climbed 1 to 34 7/8 and TJX rose 1 3/8 to 46 3/4.
* Dragging down Nasdaq were Cisco Systems, down 1 7/8 to 50 7/8; Intel, off 1 1/8 to 142 3/4; Sun Microsystems, off 2 to 29 3/4; and Oracle, down 1 5/8 to 34 1/8.
* Southland firm Access Health tumbled 8 1/8 to 14 3/8 after saying it expects lower fiscal 1997 earnings and revenue and Noven Pharmaceuticals dropped 2 7/8 to 8 1/8 after it said its expects to record a fourth-quarter loss.
Overseas, Tokyo’s Nikkei stock average fell 0.5%, Frankfurt’s DAX index fell 1.3% and London’s FTSE-100 fell 0.5%.
