Dow Picks Up After Big Fall; Nasdaq Eases

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.

Stocks were helped by the bond market, which stabilized on signs that inflation is under control despite faster economic growth.

The Dow average rose 27.57 points to 6,611.05 after struggling for much of the session. Analysts were quick to caution, however, that the gain wiped out only a small fraction of the nearly 300-point loss the Dow has suffered since Thursday.

Broader stock indicators hovered near Monday’s closing levels, ending the session mixed. The Nasdaq market, laden with tech shares and smaller, more speculative companies, closed mostly lower.

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.”

Long-term bond yields eased slightly after 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.

But with critical monthly unemployment data due Friday, the interest rate outlook remained far from clear.

What’s more, the dollar flashed trouble Tuesday: It sank to 121.76 Japanese yen in New York, down from 123.80 on Monday and the lowest level since March 10. A weaker dollar could spell trouble for bonds by encouraging foreign investors to sell.

In the stock market, 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, though it recovered from a session low of 1,206.72.

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.

Meanwhile, many foreign markets plummeted on the heels of Wall Street’s Monday tumble.

German stocks plunged 3.9%, French shares sank 2.8%, Hong Kong stocks tumbled 3.7% and Tokyo shares lost 0.7%.

In Tokyo, the Bank of Japan’s quarterly tankan survey of business sentiment showed 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, helping bonds and weakening the yen against the dollar longer-term, analysts said.

Among Tuesday’s U.S. market 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.

But many other tech issues were lower. 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. And 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 1/2 to 117 1/4 and Travelers Group climbed 1 7/8 to 49 7/8.

* Bank stocks overall rebounded from deep recent losses. 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.

Among other financial shares, Salomon surged 4 to 53 7/8, Conseco gained 3 3/8 to 39 and Student Loan Marketing jumped 3 3/4 to 99.

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.

* NO FEAR?

Investors may not be as inclined to buy on dips as is widely believed. A1