Broad Market Finishes Mixed; Techs Fall Again
Stocks closed mixed but mostly lower Wednesday, as tech stocks slid for a second session on worries about near-term earnings.
Still, the damage was fairly limited. The Dow Jones industrial average dipped 42.49 points to 7,269.66, while the tech-heavy Nasdaq composite index eased 5.24 points to 1,379.67.
Meanwhile, in Mexico City, stocks soared to record highs on the heels of the government’s announcement of a new three-year economic plan.
On Wall Street, tech stocks continued to dominate the action in the wake of Monday’s warnings from Seagate Technology and Cabletron Systems about weaker-than-expected near-term earnings.
But price declines for most issues were less severe than on Tuesday, when investors reacted with full force to concerns that demand for computer-related equipment might be slowing.
The Morgan Stanley high-tech stock index fell 0.9% on Wednesday after tumbling 4.4% Tuesday.
In the broad market, losers topped winners by 14 to 12 on the New York Stock Exchange. But winners had a 21-19 edge on Nasdaq, which analysts said pointed to investors’ continuing interest in many smaller stocks.
Some experts said trading could be at a virtual standstill today, ahead of Friday’s government report on May employment trends. That data may be key in shaping the Federal Reserve Board’s view of the economy’s strength and whether interest rates should be raised when central bank policymakers convene in early July.
“You’ve got the jobs data on Friday and the most popular sector [technology] being hit, so you have general nervousness,” said Larry Rice, chief investment officer at Josephthal, Lyon & Ross. “The big stocks are selling pretty near historic valuations. So nobody wants to make a major commitment ahead of these economic numbers.”
Still, the bond market is showing little apparent nervousness about the employment data. The yield on the bellwether 30-year Treasury bond inched up to 6.88% from 6.86% on Tuesday.
Some of the hottest market action Wednesday was in Mexico: The Bolsa stock index surged 61.50 points, or 1.5%, to a record 4,121.56 after the Mexican government said a higher savings rate, coupled with tight fiscal policies, will let the economy achieve high growth rates and a low inflation rate for the rest of this century.
In essence, Mexico wants its economy to grow at rates of more than 5% annually through 2000, while it hopes to bring inflation down to single-digit levels.
The goals represent the first attempt by a Latin American country to outline its economic targets and programs for more than a year as a way to provide a blueprint of its future economic path.
Among Wednesday’s market highlights:
* Tech shares were pressured in part by rumors that personal computer maker Gateway 2000 today will join the chorus of companies warning about slowing sales. Gateway shares fell as low as 57 but ended down just 1/4 at 61 3/4.
Other tech losers included Intel, down 2 1/2 to 142 1/2; Cisco Systems, down 11/16 to 64 1/16; Ascend Communications, down 2 7/16 to 47 7/8; and IBM, off 1 to 83 3/8. (Investor Spotlight, D9.)
But Iomega gained 1 to 20 1/4 on takeover rumors.
* PepsiCo slumped 2 1/8 to 36 after what analysts called a “disappointing” presentation by management regarding near-term earnings expectations.
* Among Mexican shares trading in U.S. markets, Telmex gained 63/64 to 46 31/64, Grupo Televisa added 1/4 to 29 5/8 and Grupo Casa Autrey soared 2 1/8 to 19 3/4.
* Profit taking hit some industrial issues, including Cummins Engine, down 1 1/2 to 62 7/8; Phelps Dodge, down 2 5/8 to 83 1/4; Alcoa, down 3/4 to 73 7/8; and Ford Motor, off 3/8 to 37 5/8.
* Winners among smaller stocks included Oakley, up 1 to 12 1/2; Grand Prix Long Beach, up 3/8 to 12 3/8; Quiksilver, up 2 1/8 to 30 5/8; and Nexstar Pharmaceuticals, up 1 1/4 to 12 1/4.
