Dow Climbs 44 as the Broad Market Slides
Stocks closed broadly lower Wednesday despite gains in some major indexes, as Wall Street’s mood overall remained downbeat.
The Nasdaq composite, which plunged 3.9% on Tuesday amid dumping of tech and Internet names, slipped just 1.29 points to 2,309.50 on Wednesday after trading as low as 2,289.90.
And the Dow Jones industrial average gained 44.28 points, or 0.5%, to 9,177.31, rebounding after Tuesday’s 158-point slide with the help of a surge in IBM shares.
But in the broad market, losers outnumbered winners by a 3-2 margin on both the New York Stock Exchange and on Nasdaq.
Once again, investors ran for the safety of the relative few big-name shares that have led the market’s rebound since October.
“It’s really only the big names that are holding up the market,” said Conley Turner, analyst at Wall Street Strategies. “There’s still a lot of uncertainty and not a lot of conviction to get back in.”
Internet stocks were mixed, after tumbling Tuesday on disappointment about the takeover terms offered by entertainment mogul Barry Diller for Net search vehicle Lycos.
The Treasury bond market contributed to the negative tone in the stock market, as long-term yields rose again amid the government’s quarterly “refunding,” or major bond auction.
The Treasury sold $10 billion of 10-year notes at a yield of 4.91%, slightly less than expected.
But some traders questioned how much appetite there would be for the final leg of the auction, when new 30-year bonds are sold today. “I think you’re going to see less interest” in the bonds, said John Burgess, who oversees $90 billion at Bankers Trust Global Investment Management.
Indeed, the yield on the existing 30-year T-bond rose to 5.36%, up from 5.30% on Tuesday and the highest since Nov. 6.
Interest rates in general have been pushed higher in recent weeks on concerns about the strength of the U.S. economy.
The market will be looking for clues as to how concerned the Federal Reserve is about the economy’s speed, as Fed Chairman Alan Greenspan testifies before the House Banking Committee today.
“There is choppiness in the market because people fear a Fed tightening” later in the year, said Uri Landesman, a money manager with J.P. Morgan Investment Management, which oversees $316 billion. Any rise in interest rates “won’t be soon, but the odds of [Fed] easing are out the window.”
Other analysts, however, say the slide in most stocks in recent weeks, which has pulled the Standard & Poor’s 500 index down 4.4% from its record high on Jan. 29, is just an overdue “correction.”
As on Tuesday, trading volume Wednesday was below average--a sign that investors are showing no great urgency to exit stocks.
Among Wednesday’s highlights:
* Major tech stocks gaining included IBM, up $6.13 to $168.88; Intel, up $3.50 to $128.81, and Cisco Systems, up $2.63 to $98.56.
* In the Internet sector, Lycos continued to plunge, falling $7 to $87.25. Other losers included Inktomi, down $3.38 to $54.50; Amazon.com, down $2.56 to $97.44, and Go2Net, down $11 to $88.
But America Online rose $2.94 to $150.88 and Broadcast.com gained $11.50 to $124.50.
* Philip Morris put pressure on the Dow, tumbling $3.94 to $41.44 after a San Francisco jury ruled that the cigarette maker must pay $1.5 million in compensatory damages to a sick smoker. RJR Nabisco fell $1.38 to $27.31 and Loews lost $2.56 to $81.75.
* Monsanto shot up $2.38 to $47.50 on news that its arthritis pain drug Celebrex had generated heavy prescriptions in its third week on the market.
But EntreMed plunged $11.63 to $12.88 after the biotech firm--whose shares reached $85 last year--was told by Bristol-Myers, the world’s largest maker of cancer drugs, that it’s turning development of EntreMed’s angiostatin anti-cancer compound back to the firm. Bristol-Myers said it no longer considers the compound a good candidate for human tests.
* Retailer Payless ShoeSource rocketed $4 to $53.25 on a strong earnings report. Shoe maker K-Swiss continued to rise after its robust earnings report Monday, adding 88 cents to $43.38.
* Some disability-insurance stocks fell on some disappointing earnings reports. Unum led the way, down $7.56 to $48.25. Its planned merger partner, Provident Cos., dove $4.63 to $34.50.
In foreign trading, many world markets continued to sink, adding to recent losses. The Hong Kong market fell 1.8% and is down nearly 9% so far this year, versus the U.S. Standard & Poor’s 500 index’s loss of 0.5%.
The Singapore market lost 1.5% on Wednesday and is down 7.6% for the year.
The German market slumped 2.2% and is down 4.2% for the year in native currency terms. Italy’s market, up 1.7% on Wednesday, is down 6.5% for the year.
Market Roundup, C7
