Dow Drops 39, Pushing 1-Week Loss to 400 Points

The battered Dow Jones industrial average on Thursday suffered its fourth loss in five sessions, but technology shares led a Nasdaq rally and bonds were steady ahead of today’s key economic report.

The markets’ action gave some analysts hope that stocks could be bottoming, at least in the near term.

The Dow index sank 39.66 points on Thursday to 6,477.35, leaving it just barely above its 1997 start of 6,448.27.

The blue-chip index now has lost 400 points, or 5.8%, in the last week alone, following the Federal Reserve Board’s decision to raise short-term interest rates for the first time in more than two years.

But the Dow’s decline Thursday was mostly tied to heavy losses in its two oil stocks, Exxon and Chevron, in the wake of falling crude oil prices.

In the broad market, several key indexes closed higher, including the technology-heavy Nasdaq composite, which jumped 12.76 points to 1,213.76 as many depressed tech stocks rebounded somewhat.

Still, losers outnumbered winners 16 to 9 on the New York Stock Exchange and 22 to 18 on Nasdaq, in active trading.

Enough is enough, some money managers said Thursday, with many individual stocks off 20% or more from their recent highs.

“We’re buying across all sectors,” said Philip Brown, president of Meridian Investment Co., which oversees $2 billion. “Stocks are no longer overvalued. They’re down to reasonable levels.”

For many investors, today’s report on March employment trends will be key. If the report suggests a further acceleration in the economy, “it could be a killer” for markets, said Jim Benning, a trader at BT Brokerage. More signs of strength could guarantee that the Fed tightens credit much more to slow the economy.

On Thursday, however, the bond market remained stuck in the same narrow range as the last few sessions, suggesting, perhaps, that traders don’t expect today’s economic data to send yields soaring.

“I think the market’s expecting a strong number,” said Denny Niedringhaus, who manages about $160 million at Southwest Bank in St. Louis. “Any weakness would be a little surprise,” and could spark a bond rally, he said.

The yield on the benchmark 30-year Treasury bond eased to 7.06% from 7.07% on Wednesday. Shorter-term yields were also mostly stable.

For stocks, many analysts say the key to the near-term trend depends on how well the market acts in its next rally attempt--whenever that finally occurs.

Among Thursday’s highlights:

* IBM slid 2 5/8 to 131 1/8 amid worries about its first-quarter earnings. But many other tech issues bounced higher after their recent severe drubbing.

Intel rose 3 5/8 to 140 5/8, Microsoft gained 3 1/8 to 95 1/8 Oracle added 1 7/8 to 38 5/8, Remedy jumped 2 15/16 to 41, Cadence Design gained 2 3/8 to 33 3/4 and Computer Associates was up 2 3/4 to 40 3/4.

Also, Lucent Technologies jumped 1 3/4 to 52 after the company told analysts it has cut internal costs and expects strong second-quarter sales in its software and wireless divisions.

And Microchip Technology gained 1 13/16 to 31 1/8 after saying it expects its revenue and earnings for the quarter ended March 31 to reach record levels.

* Some battered financial stocks attracted buyers. Morgan Stanley Group jumped 2 3/8 to 59 7/8, Citicorp rose 1 3/4 to 111 5/8 and BankAmerica added 1 to 101 1/8.

Alex. Brown surged 3 1/4 to 44 5/8 on speculation that the investment banking company may be acquired by Bankers Trust. Bankers Trust gained 1 3/4 to 82 5/8.

But many real estate investment trusts fell amid accelerated selling.

* Among energy shares, Exxon sank 2 1/2 to 102 1/4, Chevron dropped 2 5/8 to 64 3/8, Atlantic Richfield fell 3 1/2 to 129 and Unocal was off 1 1/4 to 38 5/8.

Foreign markets were mixed. Tokyo’s Nikkei stock average rose 0.5%, but Frankfurt’s DAX index fell 2.6% and London’s FTSE-100 fell 0.5%.

In currency trading, the dollar fell against the German mark after two German economic reports suggested that the Bundesbank won’t cut interest rates any time soon.

The dollar fell to 1.668 marks from 1.6762 and to 122.62 Japanese yen from 122.90.

The dollar was weighed down against the yen by concerns the Clinton administration may yet back away from its strong dollar policy. Administration officials have repeatedly warned Japan in recent days not to export its way out of recession with a weaker yen.