Dollar Plunges Against Yen; Stocks Mixed
The muscle-bound dollar was slapped around by the weakling Japanese yen on Tuesday, amid rising hopes that Japan may finally put its financial and economic house in order.
On Wall Street, however, stocks and bonds mostly yawned at the dollar’s slump, with stock-fund managers still engaged in heavy quarter-end restructuring of their portfolios. Trading volume soared.
The Dow Jones industrials eased 45.34 points to 8,952.02, but most stocks closed modestly higher. Most key indexes showed marginal changes.
The dollar and yen grabbed center stage, as the U.S. currency plunged 2.53 yen to 139.16 yen in New York--the biggest loss since the U.S. and Japan sold dollars two weeks ago.
The yen was boosted by signs that Japan is making progress to mend its ailing banking industry.
Traders also bought yen after the policy chief of Japan’s ruling Liberal Democratic Party said he is considering a permanent tax cut to spur economic growth. The government is expected to announce details of its plan Thursday.
“People have been clamoring for a permanent tax cut and a deal to bail out the banking system,” said Mark Turner, chief investment officer at Schooner Asset Management Co. in Boston. “It would appear Japan is going to deliver. It’s only natural people will review their bearishness on the yen.”
The news also boosted the Japanese stock market on Tuesday. The Nikkei-225 stock index surged 3% to 15,830.27.
The rally continued today, lifting the Nikkei 0.7% in early trading as the dollar fell further, to 138.68 yen in Tokyo.
But other Asian stock markets were up only modestly early today.
On Wall Street on Tuesday blue-chip shares were volatile in a narrow range. Trading volume rocketed to 790 million on the Big Board, the highest this year. But it was boosted as trading desks at brokerages sold large blocks of stock that had been purchased to offset customized options the desks sold to fund managers, said Bill Meehan, market analyst at Cantor Fitzgerald & Co. in Darien, Conn.
Many of those options expired at the end of the month.
Meanwhile, bonds seemed unfazed by the dollar’s gyrations. Yields closed slightly lower.
As the second quarter ended Tuesday, the Dow was up 1.7% for the quarter and 13.2% for the year. The Standard & Poor’s 500 gained 2.9% for the quarter and is up 16.8% year-to-date.
Among Tuesday’s highlights:
* Blue chips were hurt by Disney’s drop of $8.13 to $105.06 as some analysts trimmed earnings estimates. Also, Johnson & Johnson fell $3 to $74 on news of an FDA warning that its heartburn medication Propulsid may cause serious heart problems.
* Some investors turned to more conservative stocks on the last day of the quarter. The Dow utility index rose 0.5% to a record 293.87.
Also, many real estate investment trust shares gained, after being hammered in the second quarter. Kimco Realty rose $1.06 to $41. Crescent Realty gained 94 cents to $33.63.
* Cable TV stocks rallied again, in the wake of AT&T;'s takeover plans for Tele-Communications Inc. Cablevision soared $5.50 to $83.50. Adelphia Communications rose $4 to $37.13.
Meanwhile, AT&T; edged up again, rising 19 cents to $57.13.
* Internet-related stocks were hot. Yahoo surged $3.06 to $157.50, Excite jumped $7.63 to $93.50 and Earthlink rose $3.88 to $76.75.
But Cybercash slumped $2.06 to $12.19.
Market Roundup, D9