Stocks Slide as Techs Stall; Yields Surge
The stock market closed broadly lower Tuesday despite gains in some key indexes, as the recent rally in tech shares ran into some trouble.
In the Treasury bond market, long-term yields jumped, responding in part to a surge in bond yields in Japan, analysts said.
On Wall Street, the markets showed little reaction to Federal Reserve policymakers’ anticipated decision to leave short-term interest rates unchanged for now, after three cuts since Sept. 29.
Rather, analysts said selected blue-chip buying by institutional investors looking to square their books for year-end seemed to dominate the day.
That helped boost the Dow Jones industrial average 55.61 points, or 0.6%, to 9,044.46.
The Standard & Poor’s 500 index edged higher to a record, adding 0.73 point to 1,203.57 and boosting the index’s year-to-date gain to 24%.
But in the broad market, losers outnumbered winners by 17 to 12 on the New York Stock Exchange and by 24 to 18 on Nasdaq.
The Nasdaq composite, which roared to a record close Monday amid heavy buying of tech stocks, fell 17.05 points, or 0.8%, to 2,120.98--though it’s still up 35% year-to-date.
Many analysts have been arguing for weeks that despite new highs in the S&P; and Nasdaq indexes, most stocks are lagging far behind the handful of blue chips and tech names that have bolstered those indexes. That raises questions about the rally’s longevity.
Also worrisome Tuesday was the U.S. bond market’s sell-off, which sent the yield on the 30-year T-bond to 5.13%, up from 5.06% on Monday and the highest since Nov. 27.
Losses suffered by Japanese bond investors--yields there are climbing on worries about the government’s debt load--could trigger selling of U.S. Treasuries by Japanese investors, some analysts said.
“The fear is that they may lessen their exposure in the U.S. to offset losses that they’ve taken at home,” said Kevin Kennedy, who helps manage $22 billion of fixed-income securities at Citibank Global Asset Management.
Still, the dollar edged higher against the yen.
Among Tuesday’s highlights:
* The Dow got a boost from IBM, which jumped $5.88 to a record $182.25 after a Salomon Smith Barney analyst said the stock could reach $215 in 12 to 18 months.
But other tech names were mixed in profit-taking. Intel lost $3.63 to $119.06 and Sun Microsystems fell $3.63 to $83.25.
* In the Internet sector, America Online surged $21 to $138 on news of its planned inclusion in the S&P; 500 index.
Other winners included EBay, up $4.63 to $301; Amazon.com, up $3.63 to $322.38; and Ticketmaster Online, up $2.94 to $48.50.
But Onsale fell $4 to $64, Inktomi lost $5.88 to $135.13 and Yahoo eased $2.50 to $245.
* Net-hungry investors turned to online brokerages, which zoomed after Ameritrade said earnings will exceed its earlier forecasts as investors flock to Internet stock trading.
The Omaha-based company said it will earn 9 cents to 11 cents a share in its fiscal first quarter ending Dec. 31, an increase of more than 50% from its forecast of three weeks ago.
The stock rocketed $13.13 to $34.13. Other brokerage gainers included E-Trade, up $6.31 to $38.44; Charles Schwab, up $3.75 to $55.44; and National Discount Brokers, up $2 to $11.50.
* FDX, parent of Federal Express, soared $6.19 to $90.69 on continued optimism about its holiday shipping business. Airborne Freight gained $2.06 to $33.69.
* Industrial stocks were mostly weak on earnings concerns. Losers included steel firm Nucor, down $2.06 to $40.88, and chemical firm Hercules, off $2.44 to $26.19.
Market Roundup, C9
