Dow Picks Up After Big Fall, but Nasdaq Hit
The stock market steadied Tuesday, helping the Dow Jones industrial average halt its worst slide in nearly a decade, but nervous investors continued to shy away from shares in riskier companies, especially in the technology sector.
U.S. bonds rose on signs that inflation is under control.
The Dow Jones industrial average rose 27.57 points to 6,611.05. Analysts were quick to caution, however, that the gains wiped out only a small fraction of the nearly 300-point loss the Dow index has suffered since Thursday.
Broader stock indicators hovered near Monday’s closing levels, ending the session mixed. The Nasdaq market, laden with technology shares and smaller, more speculative companies, again suffered the most damage.
Several analysts said that despite the welcome respite, the outlook will remain extremely uncertain, at least as long as the questions that triggered the decline go unanswered.
“My sense is we’re still in the midst of a painful period that still has a way to go,” said Alan Ackerman, market strategist at Fahnestock & Co. “But there’s still a lot of uncertainty ahead and will be until we have a better handle on what the Federal Reserve will do next.”
Bonds rebounded after an optimistic read on the latest economic data revealed that an important force behind inflation has remained tame. The yield on the key 30-year Treasury bond fell to 7.07% from 7.09% on Monday.
The National Assn. of Purchasing Management reported that U.S. factory activity accelerated at the fastest pace in more than two years.
But the report also suggested that prices paid by factories for raw materials were steady or falling--a sign that inflation remains in check.
“The price component was good, but the tone of activity was very strong. The economy is really rocking along,” said John Shaughnessy, research director at Advest Inc. in Hartford, Conn.
A separate report Tuesday revealed that a widely followed gauge of future economic activity saw its biggest jump in a year during February, exceeding forecasts.
But with critical monthly unemployment data due Friday, the interest rate outlook remained far from clear.
Declining issues outnumbered advancers by a 7-6 margin on the New York Stock Exchange in heavy trading.
The Standard & Poor’s 500-stock list--down more than 33 points over the prior two sessions--rebounded to a gain of 2.52 points, closing at 759.64. The NYSE’s composite index rose 1.25 points to 399.80.
The beleaguered Nasdaq composite index, down more than 12% from its all-time high and more than 5% for the year, fell 4.77 points to 1,216.93.
Unlike the pattern after recent sell-offs, bargain hunters had little success in sparking a sustained rally.
“Especially in the technology sector, investors are using any rallies to sell stocks,” said Tim Grazioso, a trader at Cantor Fitzgerald & Co. in New York.
Among Tuesday’s highlights:
* Several bellwether technology issues ended higher, cushioning the Nasdaq market’s retreat. Microsoft rose 1 9/16 to 93 1/4, Dell Computer rose 3/4 to 68 3/8 and Intel rose 3/16 to 139 5/16.
A number of smaller computer-related issues fell, mostly on weaker quarterly outlooks.
Quickturn Design Systems plunged 7 3/4 to 8 1/4 after the chip design company said it will report an unexpected first-quarter loss because of a decline in orders.
Informix plunged 5 1/8 to 10 after the database software company said it expects a fourth-quarter loss.
Fore Systems fell 1 15/16 to 13 1/16, after the maker of data switches said its fourth-quarter earnings will be below analysts’ expectations.
* The Dow’s biggest gainers included several of Monday’s biggest losers: Merck rebounded 2 3/8 to 86 5/8, while J.P. Morgan rose 1 5/8 to 99 7/8. Procter & Gamble gained 2 1/4 to 117 1/4 and Travelers Group climbed 2 to 49 7/8.
* Bank stocks rebounded. Citicorp rose 3 7/8 to 112 1/8, BankAmerica rallied 2 1/2 to 103 3/8 and Chase Manhattan jumped 1 3/4 to 95 5/8.
At the Chicago Board of Trade, soybeans for delivery in May soared 19 3/4 cents to $8.75 1/2 a bushel after rising as much as 30 cents earlier after the U.S. Department of Agriculture revised downward an estimate of soybean stockpiles.
In Tokyo, the benchmark Nikkei-225 Stock index fell 0.32% after the release of the Bank of Japan’s quarterly tankan survey of business sentiment. The report shows many companies are wary that higher taxes will dampen consumer spending and stifle the growth they enjoyed during the last two quarters.
That means Japan’s central bank is bound to keep interest rates at record lows, strengthening bonds and weakening the yen against the dollar, analysts said.
* HEADSTRONG
Individual investors aren’t easily discouraged by market dips. A1
