Stocks Edge Lower, Ending 3-Session Rally; Bonds Quiet
Stocks retreated modestly Tuesday, halting a three-session rally, as the market once again ran out of gas just as it returned to where it was before last month’s sudden downturn.
The Dow Jones industrial average, which had added about 300 points in the three previous sessions, fell 47.40 points to 7,650.82, after surrendering an early 27-point gain.
Treasury bonds ended little changed after a key inflation report came out in line with expectations and after the dollar rose against the Japanese yen but edged lower against the German mark. The yield on the bellwether 30-year T-bond closed at 6.07%, up from 6.06% on Monday.
Stock investors were also somewhat rattled by continuing weakness in Southeast Asia.
“There are still a lot of problems out there in the world,” said Chris Dickerson, analyst for Global Market Strategists.
In the broader market, declining issues outpaced advancing shares 575 to 459 on active volume of 648 million shares on the New York Stock Exchange.
The Standard & Poor’s 500-stock list fell 7.97 points to 938.23, the NYSE composite index fell 3.70 points to 491.18, and the Nasdaq composite index fell 13.67 points to 1,600.44 as technology shares gave back some of Monday’s gains.
The Russell 2,000 index of smaller companies fell 3.52 points to 432.13, and the small-company-dominated American Stock Exchange composite index fell 7.79 points to 671.21.
Stocks climbed early after Tokyo’s Nikkei-225 index rallied for a second day, gaining 443.25 points, or 2.72%, to 16,726.57.
Japanese investors were initially cheered by a news report that Japan would act aggressively to prop up its ailing bank sector, including using public funds.
But Japan Prime Minister Ryutaro Hashimoto later denied the report, which boosted the dollar against the yen.
In addition, a long-awaited plan to stimulate Japan’s anemic economy fell short of expectations. The plan focused on deregulation efforts but did not include tax cuts.
“The market did not get what it wanted. It was looking for individual tax cuts and spending of public funds,” said John Gariano, a vice president at Sumitomo Bank in New York.
The dollar rose half a yen against the Japanese currency, ending at 126.15 yen, up from 125.65 on Monday.
Among Tuesday’s highlights:
* Avon fell $5 to $57.50 after the direct marketer of cosmetics said fourth-quarter earnings won’t meet analysts’ estimates because of lower-than-expected sales in Brazil, China and Japan. The company cited tighter regulatory controls in China and concern among Brazilian consumers about their nation’s economy.
* Household products maker Colgate-Palmolive, which also has a substantial business presence in Brazil, fell $2.31 to $63.94.
* AT&T;, one of the 30 Dow industrials, rose $3.87 to $52.50 after Lehman Bros. analyst Blake Bath reiterated a “buy” rating on the stock, with a 12-month price target of $72 a share. Bath said that after meeting with company executives, he’s convinced AT&T; will take steps to cut expenses and make a key acquisition.
* Granite Financial jumped $3.38 to $15.87 after Fidelity National Financial agreed to buy the equipment-leasing company for about $108 million in stock, or $18 a share. Fidelity National fell $1.13 to $24.57.
In other currency trading, the dollar slipped somewhat against the mark after a key German central banker revived speculation that German interest rates could head higher soon.
Bundesbank council member Helmut Hesse warned that inflation might accelerate next year and that a German rate hike in October might not be enough to rein in price growth.
The dollar fell to 1.7290 marks, from 1.7310 on Monday.
In commodities trading, oil prices declined somewhat as the United States and Iraq continued to move away from military confrontation.
Market Roundup, D10
