Stocks Mixed, Yields Up Amid Asia Questions
Major technology shares posted more record-setting gains, but most U.S. stocks fell Monday as prospects for an Asian economic recovery grew more uncertain with the political upheaval spurred by Sunday’s stunning election in Japan.
The Dow Jones industrial average finished 9.53 points lower at 9,096.21 after meandering through the lackluster session.
Meanwhile, the dollar closed only slightly higher against the yen after soaring initially in Tokyo trading on news of the prime minister’s resignation.
In the bond market, Treasury yields jumped sharply, which traders said reflected selling by investors who felt relieved by Russia’s bailout deal with the International Monetary Fund.
On Wall Street, losers topped winners by 1,670 to 1,307 on the New York Stock Exchange and by 2,236 to 1,903 on Nasdaq.
The lack of decisive reaction to Japan’s election surprise mirrored the response by Asian investors: Japanese stocks closed modestly higher Monday, while most other Asian markets fell.
Many U.S. investors seemed focused more on second-quarter earnings reports. Optimism about trends among leading tech companies helped send the Nasdaq composite index up 22.49 points, or 1.2%, to a record 1,965.53.
Microsoft soared $4.38 to a record $117.56 in advance of its earnings report, due Thursday. Intel, which will report today, rose $2.63 to $82.38.
Wall Street will have plenty of other earnings reports to contend with this week, as the reporting season hits high gear.
In foreign trading, Russian stocks surged 10% on news of the government’s deal with the IMF. That news also sent the dollar down against the German mark: The dollar fell to 1.802 marks from 1.818 on Friday, as dealers showed less fear of holding marks.
Against the yen the dollar gyrated wildly before settling at 141.42 yen in New York, up about 0.5 yen from Friday.
In the bond market, the bellwether 30-year Treasury bond yield jumped to 5.69% from 5.62% Friday.
“The international landscape may look a little less risky, so the premium for quality is being taken out of the market,” said Harvey Hirschhorn, who helps manage $20 billion in assets at SteinRoe & Farnham in Chicago.
Among Monday’s highlights:
* Tech sector stars included Dell Computer, up $5.38 to a record $106.19; Hewlett-Packard, up $1.56 to $60.13; Apple, up $1.75 to $33.94; and Cisco Systems, up $1.31 to $94.25.
But Applied Materials fell 94 cents to $28.56 after the semiconductor manufacturing equipment company on Friday warned that near-term profit would be lower than expected.
“They held up reasonably well in the face of what was clearly bad news, and that’s encouraging investors,” said Marc Klee, a money manager with American Fund Advisors, which oversees $400 million.
* The Internet-related sector revived, with Zapata soaring $5.31 to $22.50, Yahoo up $7.13 to $188.38, Egghead.com up $4.69 to $26.13 and America Online up $6.38 to a record $118.88.
* On the downside, GM fell $2.31 to $68.88 after weekend talks failed to end strikes at two parts plants that have idled the rest of its North American production.
* Oil-related stocks were also hit, with Exxon down $1.19 to $70.50 and Atlantic Richfield off $2.31 at $70.44, even though crude oil prices edged higher.
* Cendant plunged $3.13 to $18.88 amid concern that the controversial marketing and franchising company’s audit of its discount shopping clubs will be delayed. In April Cendant said accounting errors would force it to restate 1997 earnings lower by as much as $115 million.
Market Roundup, D14