Dow Tops 9,000 Only to Give Most of It Back
An early rally in stocks gave way to profit-taking later Thursday, leaving the broad market mostly lower.
Meanwhile, the dollar zoomed again versus the Japanese yen. Bond yields were little changed.
The Dow industrials added 11.71 points to 8,935.58 after surrendering most of a gain that pushed the index as high as 9,025.
In the broad market most key indexes closed with modest losses, as losers topped winners by 16 to 14 on the New York Stock Exchange and by 22 to 19 on Nasdaq. Trading remained heavy.
The Standard & Poor’s 500 index, which reached a record high on Wednesday, eased 0.3% to 1,129.28.
The Nasdaq composite index, up nearly 5% this week, slipped 0.8% to 1,863.25.
Traders said several factors may have triggered profit-taking, including “technical” resistance as the Dow topped 9,000, rumors that the Federal Reserve will act to prop up the yen again, and problems with a new computer chip from bellwether Intel.
“It’s certainly normal to tag 9,000 and take some profits,” said Scott Bleier, investment strategist at money manager Prime Charter. “These are just excuses to back off a little after such a ferocious one-week run-up.”
Intel and Microsoft, which had led stocks’ gains this week as investors rushed back into tech issues, turned down on Thursday, which in turn pressured the broad market, traders said.
Intel fell $1.75 to $75.63; Microsoft lost $3.38 to $101.56.
“There reaches a point where people say this is too much, too soon,” said Larry Wachtel, a market analyst for Prudential Securities. “We’ve had an enormous move in the big-cap stocks.”
The dollar’s strength also may have bothered some investors. The dollar rose above 142 yen for the first time since the U.S. and Japan sold dollars last week to help the yen. Analysts said expectations that Japan’s economy won’t emerge from recession soon outweighed concern of more dollar selling by central banks.
The dollar rose to 142.30 yen from 141.25 on Wednesday.
Bonds may have gotten a slight boost from the dollar demand. The benchmark 30-year Treasury bond yield edged down to 5.65% from 5.66% Wednesday. As for the stock market, some analysts expect the rally to revive once second-quarter earnings reporting season begins in July. Many companies that expect to disappoint Wall Street have already warned of their results, leaving the better reports for the actual reporting season.
Among Thursday’s highlights:
* Telecom stocks were mixed after heavy trading on Wednesday, when AT&T; announced its takeover bid for cable TV giant Tele-Communications Inc.
AT&T; fell $1.63 to $58.38 and TCI lost 50 cents to $39.25.
Other cable stocks also gave ground, including Cablevision, down 75 cents to $75.25, and Comcast, down $1.81 to $38.63.
But some telecom equipment suppliers continued to rally, including Scientific Atlanta, up $1.19 to $25.25, and DSC Communications, up 94 cents to $29.13.
Also, computer networker 3Com rocketed $4.38 to $31.50 after reporting strong earnings.
* Coca-Cola rose 75 cents to a record $84.88 after the company projected strong second-quarter case sales, even in Asia.
* Among rumored takeover targets, Mellon Bank surged $4.13 to $74.88 on talk that Chase Manhattan might bid.
* Energy stocks were mostly lower as crude oil fell 57 cents to $14.03 a barrel, reflecting a lack of faith in oil exporters’ ability to cut production significantly.
In foreign trading Latin American markets slumped, while European markets zoomed again.
Market Roundup, D6
