Dow Rises 60 on Profit News; Volume is Thin
Stocks ended mixed Monday after Friday’s plunge, with blue chips higher on earnings reports, but the broader market lower.
Trading volume was anemic, with just 406 million shares changing hands on the New York Stock Exchange--a sign of low conviction on the part of bulls and bears, traders said. The Dow Jones industrials, which sank 148 points Friday as bond yields jumped on new reports pointing to a stronger economy, rebounded 60.21 points to 6,451.90 on Monday.
Most broad indexes closed higher, but losers still outnumbered winners by 14 to 10 on the NYSE and by 22 to 18 on Nasdaq.
Stocks suffered early in the day from renewed selling in the bond market. Yields edged up to new nine-month highs as bond investors fretted about the economy’s pace. The 30-year Treasury bond yielded finished at 7.17%, up from 7.16% Friday.
But stock investors focused on corporate earnings reports in the afternoon, and found some reasons to buy. Coca-Cola shares jumped 1 7/8 to 55 5/8 on its strong first-quarter earnings gain. Financial services giant Travelers also had a strong report, and its stock rose 2 to 48 3/8.
“[Monday’s] rally suggests select stocks with good earnings may put some bounce back in the market,” said Alan Ackerman, market strategist at Fahnestock & Co.
Analysts said the results provided a much-needed psychological boost for beleaguered investors, who had watched the Dow dive over the last five weeks. At Monday’s low, the Dow was off nearly 35 points, bringing its drop to about 730 points, or 10.3% from its all-time high set just a month ago.
“We reached that magic 10% level, and I’m not the least bit surprised to see some buying come in,” said Richard A. Dickson, a technical analyst at Scott & Stringfellow Inc. in Richmond, Va.
Still, analysts noted that the thin trading volume made the rally seem unconvincing.
What’s more, one of the most eagerly awaited first-quarter earnings reports, from computer chip giant Intel, was released after trading ended. In after-hours trading Intel shares bounced around but ended lower, after rising 3 1/4 to 133 3/4 in regular trading.
Among Monday’s highlights:
* Among companies reporting earnings, General Motors rose 5/8 to 53 5/8, Gannett gained 2 1/4 to 83 1/4, Eaton lost 1 to 69 3/8 and Sherwin-Williams edged up 1/4 to 25 1/8.
* Bank stocks were marginally higher, but electric utility and real estate investment trust shares continued to decline, reflecting concerns about higher interest rates.
The Dow utility stock index fell 1.12 points to 210.87.
Technology issues generally turned in a solid performance after plunging on Friday. Microsoft rose 2 3/8 to 97 3/8, Cabletron Systems added 1 to 30 3/4 and Western Digital jumped 1 1/8 to 64 1/8.
But Novellus Systems which tumbled 22 1/4 to 53 after the company announced it had lost a patent infringement trial. Novellus also reported first-quarter earnings that were down sharply from a year ago.
* Energy shares rallied. Exxon gained 1 1/8 to 51 3/4, Chevron jumped 1 5/8 to 63 7/8 and Halliburton was up 7/8 to 66 5/8.
* Container carrier APL jumped 8 1/4 to 29 3/4 after agreeing to be acquired by Singapore shipping firm Neptune Orient Lines in a deal worth $825 million.
* Boeing rose 3/8 to 100 3/4 after Continental Airlines’ said it may make the jet maker its sole supplier of planes. Continental class B shares fell 1/2 to 30 1/2.
Overseas, Tokyo’s Nikkei stock average fell 0.9%, Frankfurt’s DAX index fell 1.8%, and London’s FTSE-100 fell 0.6%.
In currency trading, the dollar rose to a 37-month high against the mark and gained against the yen after officials in Japan and Germany indicated their interest rates will remain near record lows.
Market Roundup, D14
