Dow Off 21 as Rebound Runs Out of Gas
The U.S. stock market closed broadly but modestly lower Wednesday, losing a fight to extend a two-day rally which, for blue-chip stocks, had made up about a third of the ground lost in a monthlong slide from record highs.
The Dow Jones industrial average closed down 21.37 points at 8,693.28 after bouncing between negative and positive territory all day.
The Nasdaq composite index sank 12.43 points, or 0.7%, to 1,842.69. And the battered Russell 2,000 index of smaller stocks slid 1.3% to 405.84.
In the bond market, yields were mostly unchanged, with the benchmark 30-year Treasury bond ending at 5.55%, same as Tuesday.
In currency trading, the dollar fell to 143.93 Japanese yen from 145 on Tuesday. It edged down to 1.798 German marks from 1.802.
Overseas, most Asian markets closed sharply higher, with Hong Kong soaring 5.7% in the wake of the government’s decision to support the market by directly buying shares. Tokyo stocks gained 2.3%.
On Wall Street, the Dow had gained 289 points on Monday and Tuesday after having slid last week to nearly 10% below its record high set July 17.
But on Wednesday there were too many negative factors at work in the market to extend that rally, said Larry Wachtel, market analyst at Prudential Securities.
“This is not exactly a happy news background, given the president’s wobblies, Asia’s continuing to crater, no solutions in Japan [to that economy’s woes] are in sight, and there are earnings disappointments,” he said.
Another dive in stocks in Russia--which this week joined the growing parade of nations devaluing their currencies--also gave investors pause.
What’s more, while the dollar is weakening against the Japanese yen as Japanese authorities continue to threaten to intervene to boost the yen, Hugh Johnson, chief market strategist at First Albany Corp., noted that the lower dollar meant U.S. stocks didn’t get any help from Japanese buyers.
The Dow transportation average, which was buoyant for most of the session, took a dive near the close after Delta Air Lines’ refusal to give its pilots union a voting seat on the board scuttled plans for a joint venture between Delta and United Airlines.
Delta shares dropped $3.50 to $121.44. UAL, United’s parent, fell $3 to $71.06.
Dell Computer, meanwhile, rose $8.38 to $117.94 and was the most active Nasdaq issue, after the company said late Tuesday that its second-quarter net earnings jumped 62%. The company also declared a 2-for-1 stock split.
But Dell’s positive news was overshadowed by chip maker LSI Logic’s announcement that it expects third-quarter per-share earnings in the “low to mid-teens,” well below analysts’ estimates of 23 cents.
LSI lost $2.44 to close at $15.81.
Among Wednesday’s highlights:
* Energy stocks were a bright spot, with Schlumberger up $1.56 to $55.44 and Texaco up $1.06 to $62.
* Among tech shares, Intel pulled back $1.88 to $89.56, Apple fell $1.56 to $41 and Adobe Systems lost $1.19 to $25.81.
* Deere sank $2.56 to $38.13 as analysts cut 1999 earnings estimates. The news weighed on Caterpillar, which fell 63 cents to $49.88, and Case, down 44 cents to $29.56.
* Gemstar International Group rose $1.38 to $41.38 as the Pasadena-based maker of software and other technology for interactive TV said it will buy back as much as $100 million of its common stock on the open market.
* Granite Construction fell $4.31 to $27.13 on doubts that the nation’s No. 1 highway contractor can maintain its earnings performance, analysts said.
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Market Roundup, D8
