Dow Retreats as Asia Rallies; Dollar Slumps
U.S. stocks fell broadly Thursday as some traders squared their books ahead of the long holiday weekend.
In Asia, most stock markets greeted Indonesian President Suharto’s resignation with rallies. The dollar fell sharply, partly reflecting an easing of tensions over Asia.
On Wall Street the Dow Jones industrials lost 39.11 points, or 0.4%, to 9,132.37 after surging 116 points on Wednesday.
The broad market, which failed to rally with the Dow on Wednesday, also ended weaker on Thursday.
Loser topped winners by 16 to 13 on the New York Stock Exchange and by 23 to 18 on Nasdaq.
The Nasdaq composite index fell 10.76 points, or 0.6%, to 1,820.99. The Standard & Poor’s 500 lost 0.4% to 1,114.64.
The Dow rallied early in the day, but sellers quickly took control. With Memorial Day weekend approaching trading was fairly subdued, analysts said.
The U.S. market didn’t take much comfort in Suharto’s departure, even as most Asian stock markets rebounded. Hong Kong’s Hang Seng index rose 1.3% to 9,670.45, Tokyo’s Nikkei-225 index gained 1.2% to 15,845 and Singapore’s main index jumped 3.6% to 1,319.65.
Many observers expressed skepticism about Suharto’s decision to end his 32-year reign by naming his vice president to take his place.
Either way, analysts said, Indonesia is only one part of an Asian financial mess that’s looking increasingly difficult to contain.
Notably, in an appearance before Congress on Thursday, Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary Robert Rubin stressed that the U.S. economy had not yet absorbed the full effect of the Asian crisis.
The world economy has avoided economic calamity so far from Asia although there is still a chance a second round of instability could have “unexpectedly large negative effects,” Greenspan said.
“We are about as concerned now as we were back in February,” Greenspan told the House Agriculture Committee. While the situation in Asia has improved, “it’s still a sufficient concern at this particular point because we don’t know the ultimate outcome.”
The Fed, which met Tuesday without raising U.S. interest rates, is believed to be in a holding pattern in large part because of Asia.
Still, some relief over Indonesia helped push the dollar lower, after its surge of recent weeks. The dollar fell to 134.78 yen in New York from 135.98 Wednesday, and to 1.758 German marks from 1.769.
There was speculation the Bank of Japan might sell the U.S. currency to halt its recent advance. The last time the Bank of Japan sold dollars for yen was in April, just before the Good Friday and Easter holidays.
The dollar’s slide may have hurt the bond market. Bond yields were up modestly, with the yield on the 30-year Treasury bond at 5.92%, versus 5.89% Wednesday.
Among Thursday’s highlights:
* Personal computer stocks were hit for second day, as concern about price wars intensified again. Dell Computer slid $4.69 to $87.06, Compaq fell $1.06 to $28.50, Apple lost 69 cents to $28.88, Hewlett-Packard fell $1 to $64.88 and Gateway drooped 50 cents to $46.50.
Packard Bell’s decision to use new low-cost Cyrix chips helped fuel the selling. It also clipped Intel $2.88 to $74.13.
* On the plus side, Ford rose $1.88, or 3.8%, to $51.13 after the auto maker said it will report higher second-quarter earnings than expected. GM rose 94 cents to $74.31.
* Many retail stocks also continued to rally on optimism about consumer spending, with Nordstrom up $2.63 to $75.25, Home Depot up $1.69 to $74.56, J.C. Penney up $1.25 to $72.19 and Wal-Mart up 88 cents to $55.75.
Also, Loehmann’s gained $1.69 to $6.19 after the clothing retailer said earnings for its fiscal first quarter beat expectations.
Market Roundup, D6
