Stocks Close Higher But Below Day’s Peaks
The stock market closed broadly but modestly higher on Thursday, as a late wave of profit-taking erased much of the day’s advance.
The Dow Jones industrials added 36.28 points to 7,922.72, after surging as high as 8,020 at midday.
Other indexes also gained ground, but closed below their highs. The Russell 2,000 index of smaller stocks was up 0.35 point to 446.50 and the Nasdaq composite gained 3.55 points to 1,670.02. Both were record highs, as the upward march by smaller stocks continued.
Winners topped losers by 23 to 19 on Nasdaq and by 17 to 12 on the New York Stock Exchange.
Analysts said stocks’ inability to hold their gains was partly the fault of the bond market. After falling early in the day, bond yields backed up in the afternoon and closed slightly higher for the day.
The bellwether 30-year Treasury bond yield ended at 6.40%, up from 6.39% on Wednesday and up from 6.36% early in the day.
“This has been an incredibly strong week for the bond market. It may have run out of steam after one of its best weeks in a long time,” said Robert Freedman, chief investment officer for the John Hancock Funds in Boston.
Yields plunged on Tuesday after the government reported that inflation remained benign in August.
Stocks were helped by news of some major corporate restructurings.
Whirlpool, which promised to cut 4,700 jobs and to sell its financial unit, and Tektronix, which said it will eliminate 250 jobs, were the biggest gainers in the Standard & Poor’s 500 index.
Whirlpool surged $8.06 to $64.88 and Tektronix gained $5 to $67.38.
“It’s the most exceptional period in U.S. capital markets since the 1920s,” said F. Van Kasper, who runs an investment firm. “If you’re running a corporation today and you’re not getting recognition from the capital markets, you’re going to do whatever you can to get with the flow.”
The Whirlpool and Tektronix news comes three days after Sara Lee said it will sell some of its manufacturing units to focus on brand management. The maker of cakes and apparel has watched its shares soar 16% since then. Sara Lee rose 6 cents to $49.25 on Thursday.
“Managements are really trying to find ways to increase shareholder value,” said Guy Truicko, a money manager at Unity Management. “Whenever something like Sara Lee or Whirlpool pops up, I always look at it.”
That trend may become more pronounced soon: A growing number of companies in recent weeks have been warning that third-quarter earnings won’t meet expectations. That could put pressure on managements to take fresh steps to boost growth.
On Thursday, Revlon stock fell $3.63 to $49.06 after a Wall Street analyst lowered his estimate for the company’s quarterly sales, citing the impact of the strong U.S. dollar and the UPS strike.
And after the market closed, Union Carbide said its results this quarter will be below estimates. It cited weaker-than-expected profit margins. Carbide stock, a Dow component, rose 13 cents to $53.63 before the news was announced.
Among Thursday’s highlights:
* The Dow’s biggest gainers included International Paper, up $2.19 to $58.06; United Technologies, up $1.75 to $82.88; and Alcoa, up $1.69 to $82.81.
* Oil stocks were also hot. Exxon jumped $1.38 to $66 and Chevron gained $1.88 to $88.50.
Benton Oil jumped $2.25 to $18. The company said it couldn’t account for the activity.
* On the downside, Galoob Toys sank $4.19 to $16.94. The company declined to comment on the activity, but analysts speculated that near-term earnings may be weak.
In currency trading, the dollar rose against the Japanese yen after an influential investment advisor was quoted as saying the exchange rate would rise to 130 yen by year-end. The article quoted the source as an advisor to renowned global financier George Soros.
The dollar hit an intraday high of 122.30 yen before backing off to 121.76 yen in late trading, up from 121 yen Wednesday.
