Stocks Mixed as Investors Await Reports
A big recovery in stocks fizzled Tuesday as the inflation-sensitive market looked to the next batch of reports for a snapshot of the economy.
The Dow Jones industrial average lost 18.68 points to close at 8,898.96, a day after plummeting 147 points on fears the Federal Reserve Board may soon raise interest rates to slow the economy.
In the broad market, advancing issues led decliners 1,815 to 1,140 on active volume of 692.74 million shares on the New York Stock Exchange.
The Nasdaq composite index rose 11.46 points to 1,831.77, clawing back from Monday’s 49-point sell-off.
“The market tried a very normal knee-jerk oversold bounce with modest success,” said Alfred Goldman, a technical analyst at A.G. Edwards. “What we got today was a bull market that gives ground begrudgingly.”
Investors appear to be waiting until more economic reports, to be released Thursday and Friday, shed additional light on whether there are inflationary pressure in the economy that could provoke a Fed rate hike.
“Investors may be a little cautious until we get some economic data later in the week,” said Bill Meehan, chief market analyst at Cantor Fitzgerald.
The lack of follow-through after the morning’s highs may also have disappointed investors, he said.
The first-quarter employment cost index is due Thursday, and the National Assn. of Purchasing Management’s activity index for April will be released Friday.
In economic news out Tuesday, durable-goods orders rose at an unexpectedly slow pace in March, suggesting manufacturing--and perhaps the overall economy--has started to slow down.
Orders of long-lasting items rose 0.4%, while economists polled by Reuters had projected, on average, a 0.9% gain.
“The market is making a good showing,” said Roy Blumberg, chief investment strategist at Fahnestock & Co.
“From here we will do some backing and filling as we set up for a rally that could last a couple of weeks and take the averages back to their old highs,” he said.
Stocks tumbled Monday on a Wall Street Journal report that the Fed at its March meeting had moved from a neutral to a tightening bias on interest rates.
Treasury Secretary Robert Rubin reiterated his remarks Monday that he saw steady growth and low inflation as the “most likely scenario” for the economy, and that Asia’s economic woes will help keep inflation muted.
Investors were also reassured by analysts who stressed that a monetary tightening bias has not always led to actual rate increases.
The inflation-sensitive bond market, jolted by Monday’s developments, struggled again on Tuesday, with the yield on the 30-year Treasury bond pushing further above 6%, to 6.07%, up 2 basis points. The long-bond yield, which on Monday rose above 6% for the first time since early March, is used to calculate the interest charged on many types of loans.
Among components in the Dow index, Merck & Co. said its earnings per share will probably grow a robust 14% to 18%. Its stock rose $2.69 to close at $115.50.
IBM gained 38 cents to $115.69 in NYSE trading after the company said it was setting aside $3.5 billion for a stock repurchase plan and raised its quarterly dividend on common stock by 10%.
Cendant gained 94 cents to $24.25. The company, whose stock lost half its value recently when it said it would restate 1997 results due to accounting irregularities, said it would meet or beat forecasts in its first-quarter results.
Franklin Resources rose $4.50 to $53.38 after Standard & Poor’s Corp. said it would move the stock to its S&P; 500-stock index from its S&P; MidCap 400-stock index.
3M rose $2.31 to $92.50 despite reporting slightly lower first-quarter profits on disappointing U.S. sales.
The Standard & Poor’s 500-stock index slipped 1.43 points to 1,085.11. The American Stock Exchange index rose 4.03 points to 733.03.
The NYSE composite index of all listed common stocks rose 0.51 point to 563.56. The average share was up 5 cents.
The Russell 2,000 index of smaller companies rose 4.04 points to 472.54.
Overseas, Tokyo’s Nikkei-225 stock average fell 1.6%, Frankfurt’s DAX-30 index fell 1.4% and London’s FTSE-100 rose 1.5%.
Bullish earnings news from online bookseller Amazon.com reignited the recent rally in Internet stocks. Amazon.com jumped $12.88 to $95.63. On Monday, it also announced the acquisition of three Internet companies.
K-tel International gained $2.56 to $37.31, Yahoo rose $4.13 to $116.25, Infoseek gained $2.25 to $32.63 and Market Guide rose $1.75 to $13. America Online, the largest consumer online service, gained $2 to $74.88.
Franklin Resources jumped $4.13 to $53 after Standard & Poor’s said Franklin will replace CoreStates Financial in the S&P; 500 index. Franklin fell Monday along with other financial firms, on concern that its mutual fund business would be hurt if rising interest rates choke the bull market.
Associated Press, Bloomberg News and Reuters were used in compiling this report.
