With Slight Gains, Stocks Erase Losses From Plunge
Stock and bond markets barely budged Wednesday, but some major indexes managed to pull themselves just over the levels they were at before last week’s worldwide plunge.
Analysts said it wasn’t very surprising to see the market lose some momentum after such a volatile period. “It’s not likely that the market is going to keep running away on the upside. More likely, it will bounce around for a while,” said A. Marshall Acuff Jr., equity strategist at Smith Barney.
Markets may have reacted to positive comments by U.S. Deputy Treasury Secretary Lawrence Summers, who said the Asian crisis should not have a big impact on U.S. growth, and by Japan’s vice minister for international affairs at the Finance Ministry, Eisuke Sakakibara, who said he expects the Asian turmoil to stabilize. Troubles in Asia were blamed for last week’s market tumbles.
But although equity markets were flat, the dollar jumped to a six-month high of 123.07 against the Japanese yen, up from 122.15 on Tuesday, a sign that traders think Asia’s financial crisis will impede Japan’s economic recovery.
Traders suspect the currency crisis savaging Southeast Asia since the summer, especially if it spreads to South Korea, will force Japan to weaken the yen to maintain market share in the region. Japan relies strongly on exports to keep its economy afloat.
John Nelson, foreign exchange manager at ABN-AMRO Bank, said Japan would consider a yen devaluation, which would make Japanese exports cheaper abroad, only as a last resort. But Japan is running out of options, he added.
In the bond market, the yield on the benchmark 30-year U.S. Treasury fell from 6.24% to the previous day’s 6.21%.
U.S. markets ended the day with small increases. The Dow industrials were up 3.44 points at 7,692.57; Nasdaq rose 6.18 points to 1,637.33; the New York Stock Exchange gained 1.71 points to 495.77; and Standard & Poor’s 500-stock index rose 2 points to 942.76.
Among Wednesday’s highlights:
* The technology sector posted scattered gains despite a healthy profit report from Cisco Systems, the bellwether of the computer-networking sector. Cisco rose $2.19 to $85.44 in active Nasdaq trading, but Intel fell $1.31 to $74.63, and Dell Computer fell $2.06 to $83.63.
* Oxford Health Plans fell further as the health-care provider announced that its chief financial officer, Andrew Cassidy, will resign in the wake of the company’s disappointing earnings results. Oxford shed more than 60% of its value in the last week and a half. The stock closed down $1.44 at $23.88.
* Mac Frugal’s Bargains-Close Outs rose $3.25 to $40.81 after Consolidated Stores announced a $995-million acquisition of the discount retailer. Consolidated was up $4.31 at $45.44.
* Cole National fell $6.13 to $37.38. The company said its third-quarter earnings will disappoint because of softening sales.
* ITT rose $2.06 to $80.06 as the battle between Hilton Hotels and Starwood Lodging to take over ITT heated up.
Market Roundup, D12
