Stocks Retreat Slightly; Yields Inch Higher
What goes up may not come down a lot, but it may rest a bit.
That seemed to be Wall Street’s message on Thursday, as stocks eased after Wednesday’s explosive rally to new highs.
Meanwhile, gold jumped as traders tried to stir some interest in the metal, and Treasury bond yields inched up.
On Wall Street, the Dow Jones industrials eased 18.11 points to 8,020.77, surrendering a midday gain that took the index to 8,068.
Broader market indexes also fell amid continued heavy trading. The Nasdaq composite fell 11.78 points, or 0.8%, to 1,568.85, after soaring 2.5% on Wednesday.
Losers topped winners by 16 to 13 on the New York Stock Exchange and by 23 to 18 on Nasdaq.
Traders said the market was hit by natural profit-taking one day after the Dow’s first-ever close over the 8,000 mark.
But many analysts said the surprise was that sellers couldn’t do more damage than they did.
“We were set up to get smacked,” said Alfred E. Goldman, analyst at A.G. Edwards in St. Louis. “It’s a very strong statement when a market is as extended as this one is and the sellers still can’t get anything going. That shows we still have upside momentum.”
The profit picture remained bright Thursday with strong second-quarter reports from bellwether companies such as Merck, Sears and Coca-Cola.
But the big earnings event of the day came after the closing bell, when Microsoft reported its results, which were slightly ahead of expectations. (Story, D1.)
In the bond market, meanwhile, yields closed slightly higher after hitting seven-month lows on Wednesday in the wake of another benign inflation report. The 30-year T-bond yield ended at 6.49%, up from 6.47%.
Some bond investors were nervous ahead of Federal Reserve Chairman Alan Greenspan’s semiannual congressional testimony, which starts Tuesday.
But with inflation low and economic growth moderate, “I’m trying to figure out what he can be concerned about,” said Jim Somers, who manages $2.5 billion in bonds at Martindale Andres & Co.
Among Thursday’s highlights:
* Profit-taking clipped such blue chips as Hewlett-Packard, down $2.38 to $66.50; 3M, down $2.50 to $99.50; and Coca-Cola, which fell $1 to $69.88 despite reporting quarterly operating earnings (before one-time items) up 12%, meeting expectations.
* AT&T; also weighed down the Dow, falling $1.31 to $35 a day after the company announced that its president quit after the firm backed away from a promise to make him the next chief executive.
* Merck helped bolster the Dow, soaring $8.25 to $106.75, after the drug giant said second-quarter earnings zoomed 19%, to 96 cents a share, from 80 cents a year earlier, as sales leaped 20%.
“They had tremendous strength in top-line sales,” Said Mariola Haggar, an analyst at Deutsche Morgan Grenfell. “All of their new drugs and several of the old ones did better than expected.’
* Technology shares were mixed after Wednesday’s surge. Intel eased 56 cents to $87.81, Compaq lost $1.44 to $132.06 and Ascend Communications fell $2.56 to $52.44, while Apple rose $1.06 to $17.50 and IBM added $2 to $99.63.
Aspect Telecommunications was among the day’s big tech losers, plunging $6.44 to $19.81 on a disappointing earnings report.
* Energy issues were higher after Burlington Resources agreed to buy Louisiana Land & Exploration in a $3-billion deal. Texaco rose $2.19 to $111.81, Noble Affiliates surged $2.06 to $41.13 and Oryx Energy gained $1.88 to $24.38.
In commodities trading, gold jumped $6 to $324 an ounce in New York futures trading amid rumors of buying by short-term traders.
Among emerging markets, Brazilian shares slumped again, with the recently red-hot Bovespa index tumbling 7.2% to 11,728. Asian markets, in contrast, were mixed.
