Blue Chips Fall With Continued Global Crises
Blue-chip stocks fell Friday, halting the recovery from this week’s sell-off, as investors bid up smaller companies with less exposure to an increasing number of overseas crises.
Bonds were mostly higher. Oil prices rose on signs that world producers might be considering further steps to cut back swollen supplies to prop up prices.
The Dow Jones industrial average fell 70.25 points to 8,899.95 despite an early 56-point foray back above 9,000. It was the second-biggest point drop for the year.
The decline capped a volatile week in which the Dow lost 214.49 points as the latest wave of Asian jitters sent the blue-chip barometer plunging 150 points on Tuesday and as much as 175 points on Wednesday.
A late rally erased most of Wednesday’s losses, but the rebound quickly lost momentum as a budding nuclear arms race between India and Pakistan complicated an Asian backdrop already wracked by economic and political instability.
The broad market was mixed Friday, with those indexes dominated by smaller companies advancing for a second straight session.
“The market’s going to go through a choppy phase until such time as second-quarter profit numbers are released in July,” said John Shaughnessy, chief investment strategist at Advest of Hartford, Conn. “We need a clarification of the earnings picture, a clarification of the Asian damage.”
Analysts said investors were not prepared to stick their necks out over Asian economies, the slide in the yen, turmoil in Russian stocks and the holding of nuclear tests by Pakistan to match India’s.
“There is a lot of concern as we head into the weekend surrounding the Asian, Russian and Indian potential crises,” said Tony Dwyer, chief market strategist at Ladenberg Thalman.
In Russia, stocks and the ruble were under pressure from worries about the nation’s deteriorating foreign exchange reserves.
As President Boris Yeltsin tried to boost confidence in Russia’s economy and financial markets, Moody’s Investors Service Inc. cut the country’s long-term foreign currency debt rating, citing Russia’s economic problems.
The U.S. stock market is also nearing the pre-announcements season when companies warn if current quarterly earnings may disappoint Wall Street.
U.S. Treasury bonds ended mostly higher, with the yield on the key 30-year bond edging lower to 5.80% from 5.82% on Thursday.
Bellwether technology shares, which have been battered repeatedly since last fall because of their heavy exposure to foreign markets, led the blue-chip retreat.
The Nasdaq composite index was off 15.75 points, or 0.88%, at 1,778.87.
The Standard & Poor’s 500 fell 6.78 points to 1,090.82, and the technology-heavy Nasdaq composite index fell 15.75 points to 1,778.87.
Advancing issues outnumbered decliners by a 7 to 5 margin on the New York Stock Exchange, where composite volume totaled 653.34 million shares, down from Thursday’s pace.
The NYSE composite index fell 1.82 points to 565.28, and the American Stock Exchange composite index rose 1.02 points to 714.60.
The Russell 2000 index of smaller companies rose 0.81 points at 456.62.
Among Friday’s highlights:
* IBM fell $2.56 to close at $117.50, and Hewlett-Packard fell $1.56 to $62.31 as two of the Dow’s weakest components, along with 3M, down $2.38 to $92.63, and J.P. Morgan, down $2.38 to $124.19.
Likewise, Intel slid $2.06 to $71.44, and Dell Computer fell $2.22 to $82.41 to lead the Nasdaq decline.
In currency trading, the dollar shot to its highest level against the Japanese yen in nearly seven years amid signs that Japan’s battered economy was worsening--but talk that the Bank of Japan would move to defend the currency capped the rally.
In late New York trading, the dollar was off the 139.23-yen high reached in August 1991, but still higher, at 138.90, than Thursday’s 138.81.
Overseas, Tokyo’s Nikkei stock average fell 0.8%, Frankfurt’s DAX index rose 1.6% and London’s FTSE-100 rose 0.16%.
Market Roundup, D6
