Stocks Mixed as Yields Rise; Dollar Climbs
Blue chip shares ran out of gas on Monday as bond yields hit their highest levels in a month.
But smaller stocks continued to advance, led by technology shares.
Meanwhile, in currency trading the dollar hit a new 5 1/2-year high against the Japanese yen, despite suggestions that Japan may soon cash in dollar-denominated bonds to shore up its banks.
On Wall Street the Dow Jones industrials ended down 38.29 points at 8,110.84 after surging 98.97 points on Friday.
The Standard & Poor’s 500 index slipped 1.42 points from Friday’s record close of 983.79.
Blue chips’ big gains on Friday followed the robust November employment report, which showed the U.S. economy creating jobs at a breakneck pace last month.
On Monday, however, investors showed renewed concern that Asia’s economic crisis may offset some of the earnings gains U.S. multinational companies may reap from strong U.S. growth in the near term.
Coca-Cola led blue chips lower, falling $2.50 to $63.56 after analysts at Morgan Stanley, Dean Witter and Salomon Smith Barney trimmed their 1998 earnings estimates for the soft drink firm, citing the dollar’s strength against the yen.
A strong dollar lowers the value of foreign-derived earnings when they are converted into dollars.
After the market closed, another major company indicated it had been hurt by the Asian financial debacle. Software giant Oracle reported lower-than-expected quarterly earnings, citing in part slower orders from Asian customers.
But for much of Monday, tech stocks were back in investors’ good graces, powering the Nasdaq composite index up 17.64 points, or 1.1%, to 1,651.54.
Smaller stocks in general were higher. Winners topped losers by 16 to 14 on the New York Stock Exchange and by 22 to 19 on Nasdaq.
The stock market’s performance was surprising, analysts said, given the across-the-board rise in interest rates. Bond yields began to rise on Friday after the strong employment report, and the advance continued Monday.
The yield on 1-year Treasury bills rose to 5.62% from 5.58% on Friday and 5.50% last Thursday.
The yield on 30-year T-bonds finished at 6.14%, up from 6.09% on Friday and the highest since Nov. 10.
Besides the usual worry about the economy’s pace, bond traders also were spooked Monday by fears that Japan may sell U.S. Treasury securities to raise cash to bolster ailing banks. Haruhiko Kuroda, director-general of the Ministry of Finance’s International Finance Bureau, said he wouldn’t rule out such a plan.
Yet that didn’t hurt the dollar, which rose further against the yen, to a 5 1/2-year high of 130.45 versus 130.20 Friday. The dollar also gained against the German mark.
Among Monday’s highlights:
* Tech shares reviving included Microsoft, up $3 to $146.13, just shy of its all-time high of $150.75; Dell, up $2.25 to $96; Sybase, up $1.38 to $14.94; and National Semiconductor, up $1.19 to $30.63,
* Transportation stocks were strong, led by AMR, parent of American Airlines, up $3.81 to $131.81; Delta Air Lines, up $1.38 to $119.19; and US Airways, up $2.25 to $63.25.
* Many bank stocks jumped as two mega-mergers were announced: Tennessee’s First American agreed to buy Deposit Guaranty of Mississippi; and Swiss Bank and Union Bank of Switzerland decided to wed.
Among U.S. banks, Mellon surged $4.38 to $63, California State Bank gained $3.50 to $39, Barnett Banks rose $1.63 to $73 and BancOne was up $1 to $56.50.
In foreign trading Asian stock markets were mixed, with the Malaysian market rocketing 11.4% and Indonesia gaining 2.1%, but Japan falling 1.8% and South Korea down 4.4%.
Market Roundup, D12
