Blue Chips Edge Up but Most Stocks Decline
The stock market struggled through a lackluster session Tuesday, with the Dow industrials edging higher while the broad market fell.
Meanwhile, the dollar rose to a six-month high against the yen on expectations that U.S. and Japanese officials will let the yen weaken further as Japan’s economy continues to suffer.
On Wall Street, the Dow added 6.14 points to 7,558.73, with trading light because many financial institutions were closed in observance of Veterans Day.
But losers topped winners by 15 to 13 on the New York Stock Exchange and by 23 to 18 on Nasdaq.
Blue-chip stocks rallied early in the day, but sellers again pulled the market lower in the afternoon. Continued weakness in Latin American markets, in the wake of the Brazilian government’s spending cutbacks announced Monday, weighed on Wall Street.
Heavy-machinery maker Caterpillar, one of the 30 Dow stocks, was hammered down $2 to $48.19 on concerns about potentially slower sales growth in 1998 because of Asia’s economic woes and the spillover effect in Latin America. Caterpillar’s stock has tumbled 22% from its recent peak.
Big bank stocks were also hurt by fears of economic problems overseas. Citicorp slid $2.44 to $123.44 and now is off 15% from its 1997 peak.
Also, the dollar’s strength against the yen, as Japan’s economy has stagnated, is raising concerns about the future competitiveness of American industrial companies.
The dollar hit a six-month high of 125.03 yen in New York, up 0.63 yen from Monday.
Earlier this year, finance officials in Japan complained when the dollar rose above 120 yen, prompting traders to sell dollars.
“Now they’re likely to say let’s lay off, or they’re going to fall into a full-fledged depression,” said Dave Moline, a currency trader at Norwest Bank in Minneapolis. “Japan has to let the yen devalue to compete” with other exporters.
Against the backdrop of a troubled global economic picture, the Federal Reserve Board meets today in Washington. It is expected to leave interest rates alone.
The bond market was closed Tuesday in observance of Veterans Day, but long-term bond yields have been hovering near their lows for the year, as some investors--fearful about corporate earnings prospects in 1998--have fled stocks for bonds.
On Thursday, Greenspan testifies before lawmakers on the financial turmoil in Asia and its impact on the economy.
Among Tuesday’s highlights:
* Industrial stocks falling with Caterpillar included Deere, down $2.13 to $53; Alcoa, down $1 to $69; GM, down $1.81 to $63.63; and Ingersoll-Rand, off $1.19 to $36.94.
* In the banking sector, BankBoston sank $3.06 to $79.75, BankAmerica lost $1.19 to $70.88 and Chase Manhattan dropped $1.69 to $112.38.
* Apparent disappointment over Eastman Kodak’s restructuring plans sent its shares down $4.06 to $62.19.
* On the plus side, investors flocked to some telephone and electric utilities--stocks often perceived to be “safe havens” in times of market turmoil. Winners included BellAtlantic, up $2.31 to $83.44; Ameritech, up $2.56 to $70.25; Edison International, up 31 cents to $25.94; and PG&E;, up 25 cents to $26.31.
In foreign trading, Brazil’s blue-chip index, the Bovespa, sank 295 points, or 3.3%, to 8,711 as investors continued to exit Brazilian stocks on economic worries.
Tokyo’s Nikkei-225 stock index gained 1.1%, rebounding somewhat from its recent drubbing. It still is down 18% from Jan. 1.
In Seoul, stocks closed off 0.6% after falling more than 3% early in the day. The Korean won strengthened against the dollar after the central bank bought the currency to pull it back from a record low.
That show of resolve encouraged local individuals to buy stocks on the hope that the government will make good on its pledge to stabilize stocks and the won, analysts said.
Market Roundup, D12
