Dow Finishes Unchanged; Most Stocks Edge Higher
Stock investors tapped the brakes Tuesday, leaving the market mixed but mostly higher.
The Dow Jones industrials ended unchanged at 8,706.15 after a midday rally gave way to late profit-taking.
But the broad market eked out small gains, as winners topped losers by 1,617 to 1,450 on the New York Stock Exchange and by a mere 14 stocks on Nasdaq.
The Nasdaq composite lost 0.7% amid profit-taking in big tech names, but the Russell 2,000 small-stock index added 0.2%.
Meanwhile, Treasury bond yields eased as the government began its quarterly “refunding,” or auction of longer-term bonds.
Global markets got some good news from Europe, where the Bank of Spain made a surprise 0.25-point cut in its benchmark lending rate to leave the cost of money at a record-low 3.5%--moving closer to a common interest rate for Europe ahead of Jan. 1 monetary union.
Portugal and Sweden also reduced rates.
Those cuts, which follow rate cuts by Italy and Ireland last month, narrow the spread with Germany’s 3.3% base rate and give the European Central Bank more room to lower rates once it takes over monetary policy Jan. 1.
Still, European stock markets ended mixed.
Markets worldwide have rallied since early October on optimism that the turmoil of August and September has run its course--helped by rate cuts in Europe and by the U.S. Federal Reserve Board.
Optimism also has spread to battered Asia. This week, well-known U.S. stock strategist Barton Biggs of Morgan Stanley Dean Witter recommended Japanese stocks, arguing that the Japanese market “is truly cheap.”
Early today in Tokyo, the Nikkei-225 index surged 431.95 points, or 3.1%, to 14,384.
Latin American markets were strong on Tuesday, with Brazilian stocks rising 6.6%.
But on Wall Street, some analysts think the U.S. market will soon run out of steam.
“I don’t see the stock market going materially higher,” said Robert Rodriguez, who runs $1.8 billion for First Pacific Advisors in Los Angeles. “The threat of lower earnings and sluggish revenue growth hasn’t been eliminated.”
In the bond market, the 30-year Treasury bond yield fell back to 5.21% from 5.25% as the Treasury sold new five-year notes at a yield of 4.34%, slightly above expectations. New 10-year notes will be sold today and new 30-year bonds on Thursday.
Among Tuesday’s highlights:
* The Dow’s flat finish--its first since Dec. 2, 1996--occurred even as some stocks move sharply. Coca-Cola rose $1.94 to $72.94 and Union Carbide jumped $2.81 to $42.81, while McDonald’s slid $1.88 to $65.75.
* GE rose $1.13 to $88.50 after it was reiterated a “strong buy” by analyst Nicholas P. Heymann at Prudential Securities.
* Citigroup fell $2 to $44.13. The world’s biggest financial services company has lost more than 6% of its value in the two days after the departure of James Dimon, heir apparent to the company’s top job.
* Tech and telecom shares were mixed. PairGain Technologies fell back $2.44 to $11.19 after surging Monday on vague takeover rumors. Ciena, also in the takeover spotlight lately, sank $3.56 to $18.25.
Winners included Iomega, up $1.25 to $7; Autodesk, up $2.25 to $35.50; and EarthLink Networks, up $2.88 to $43.25.
* K-Tel International soared $6.38, or 93%, to $13.25 after the company said it will sell music on the Playboy Enterprises Web site, buoying optimism that its online business will gain on larger rivals. K-Tel, which advertises music compilations such as “Hooked on Classics” on TV, will list its 250,000 music titles in a jointly developed store on the site. Playboy rose $1.19 to $16.
Market Roundup, C11
