Dow Breaks Losing Streak; Bonds Rally
The Dow Jones industrial average snapped a four-day losing streak but was unable to sustain a fresh assault on the record books Tuesday as the first quarter came to a close. Bonds rallied as Federal Reserve Board policymakers left short-term interest rates unchanged.
The dollar rose against the yen as attention remained focused on Japan’s stagnant economy. But oil prices fell as the market turned thumbs-down on a landmark OPEC agreement to cut production for the first time in a decade to boost prices.
The Dow closed up 17.69 points at 8,799.81, 11% ahead of where it began the year.
“There was a lot of random noise with last-minute portfolio alignment, but the market has a firm underlying tone and portfolio managers are buyers on balance,” said Michael Metz, chief investment strategist at CIBC Oppenheimer.
The market got an initial boost Tuesday on news of overseas gains and of diminishing consumer confidence. The Conference Board said its consumer confidence index fell in March from a 29-year high the previous month as consumers grew more wary that the healthy economic climate may soon weaken as a result of Asia’s economic woes.
News of such consumer caution will boost the stock market, because investors have been concerned that the economy was growing so fast that inflation could again pose a threat.
The Fed, the nation’s inflation watchdog, left interest rates unchanged at its regular rate-policy meeting Tuesday. The decision was widely anticipated on Wall Street.
The Fed’s inaction brought more good news to bonds, which began a rally after the Chicago branch of the National Assn. of Purchasing Management said its prices-paid index, an inflation gauge, fell to 48.7 in March from 55.5 last month, even as manufacturing boomed. A reading below 50 indicates more companies reported price declines than increases.
The yield on the benchmark 30-year Treasury bond fell to 5.93% from 5.97% on Monday.
On the New York Stock Exchange, advancing issues outnumbered decliners by an 11-6 margin in heavy trading.
Stocks’ advance was broad, with the Nasdaq composite and Russell 2,000 indexes setting records. The Nasdaq rose 16.98 points to 1,835.68, breaking its previous mark of 1,828.54 set last Thursday. The Russell 2,000 closed at 480.68, up 4.45 points, breaking its previous peak of 477.81, made last Thursday.
The Standard & Poor’s 500 index rose 8.20 points to close at 1,101.75, and the NYSE composite index rose 3.89 points to 572.78.
Among Tuesday’s highlights:
* Key technology stocks advanced. Dell Computer rose 56 cents to $67.75, Microsoft rose $1.50 to $89.50 and Intuit rose 88 cents to $47.50.
Motorola surged $3.31 to $60.75 on reports that it plans a major restructuring. The company confirmed the reports but provided no details, saying in a statement that any reorganization “will be designed to create growth and new opportunities.” An announcement could come in several weeks.
* Tobacco stocks fell after Senate Commerce Committee Chairman John McCain (R-Ariz.) proposed a bill that would deny cigarette makers key legal protections agreed to last summer.
Philip Morris fell $1.31 to $41.69, RJR Nabisco Holdings fell $1.88 to $31.31 and Loews fell 50 cents to $104.25.
* Oil-related stocks fell as crude prices slid almost 4% on the New York Mercantile Exchange. Chevron dropped $2.75 to $80.31, and Schlumberger fell $1.25 to $75.75.
Airlines, whose profits have been boosted by low fuel prices, gained. Delta Air Lines rose $2.75 to $118.25, and AMR rose $4.13 to $143.19.
Aerospace companies, which would be selling more jet engines if the airline industry continues to thrive, also gained. United Technologies rose $1.38 to $92.31, and AlliedSignal rose 50 cents to $42.
* American Home Products rose $3.63 to $95.38 on news that a study has found that the company’s Redux obesity drug, taken off the market last year because of safety concerns, does not significantly increase heart-valve problems.
* Nextel Communications jumped $3.69, or 12%, to a four-year high of $33.75 after Standard & Poor’s said it will add the wireless phone company to the S&P; 500 index.
In commodities trading, oil prices closed 60 cents lower at $15.61 a barrel on the New York Mercantile Exchange amid doubt that a landmark agreement by the Organization of Petroleum Exporting Countries to cut production would succeed in steadying the market.
Overseas, Frankfurt’s DAX index was up 1.8%, London’s FTSE-100 was up 0.34% and Brazil’s Bovespa index rose 1.67%.
Market Roundup, D9