Dow Claws Back Above 11,000; Euro Up Again
Stocks managed a modest rebound on Wednesday after Tuesday’s dive, with many Internet-related shares leading the way.
Nasdaq’s composite gained 29.59 points, or 1.1%, to 2,761.77 after plunging 3.5% on Tuesday.
The Dow Jones industrials inched up 6.65 points to 11,002.78. They lost 191.55 points on Tuesday.
In currency trading, the big surprise was another rebound in the battered euro, which climbed to a six-week high of $1.053 on more data suggesting that European growth is reviving.
On Wall Street, analysts said Tuesday’s market pullback appears to have been little more than one day of heavy profit-taking after the market’s surge of recent months.
On Wednesday, winners edged losers on both the New York Stock Exchange and on Nasdaq.
Another load of corporate earnings reports showed many companies racking up hefty profit gains in the second quarter. Most companies have met Wall Street’s high expectations. But fears about earnings strength in the second half helped trigger selling in leading tech stocks on Tuesday.
On Wednesday, many of those shares posted small gains. Microsoft added $1.38 to close at $94.69 after trading as low as $93 and as high as $95.31. Lucent Technologies rose 19 cents to $70.13. It had tumbled $6.89 on Tuesday.
Some analysts warned that profit-taking might not have run its course. “The market needs some stabilization. If it doesn’t settle down, you have to wonder how much downside risk remains out there,” said Robert Streed, strategist at Northern Trust in Chicago.
Investors will be listening today to Federal Reserve Chairman Alan Greenspan’s testimony on the economy before the House Banking Committee. Bond yields edged up Wednesday. The 30-year Treasury yield rose to 5.90% from 5.88%.
In currency trading, the euro rose more than 1 cent against the dollar, continuing a rebound that began last week.
German construction orders rose 0.9% in May, a second monthly gain. A separate survey showed German business optimism leaped in June. The data point to a rebound in Europe’s largest economy.
“We’re finally getting some better numbers out of Europe,” said Kathy Jones, analyst at Prudential Securities. “There’s potential for a pretty decent recovery in the euro in the second half of the year.”
The dollar also fell against the yen even after the Bank of Japan sold yen for a second day. The dollar fell to 118.10 yen from 118.95.
The yen is gaining on optimism about Japan’s economy. The Bank of Japan said Wednesday that the economy has stopped deteriorating. But Japan fears that a stronger yen could undercut its exporters and stymie growth.
Japan’s Nikkei stock index fell 1.5%, and dove further early today.
In commodities trading, gold rose $2.20 to $256 an ounce after influential House Banking Committee Chairman Jim Leach said he opposed gold sales from International Monetary Fund reserves. Congress must approve any such sale.
“The possible cancellation of the IMF gold sale was good for a bear market bounce,” said Tony Caen, trader at Credit Lyonnais Rouse USA in New York. “An outright cancellation would give the market even more of a lift.”
Among Wednesday’s highlights:
* Internet stocks rose in advance of, and in reaction to, earnings. America Online gained $1.88 to $115.06 and Amazon.com rose $5.31 to $125.44 before both reported earnings. But in after-hours trading both stocks lost ground.
Other Net shares gaining included RealNetworks, up $10.13 to $87.94 after the Net software firm said late Tuesday that it broke even in the second quarter. Also, Yahoo jumped $9.75 to $151.88 and Lycos rose $5.13 to $100.94.
* Among major tech stocks, Apple rose $1.19 to $54.06, IBM added 75 cents to $129, Intel gained 63 cents to $65.56, Motorola jumped $2.50 to $93 and Micron Technology surged $3.06 to $52.44.
* Goodyear sank $2.88 to $54.75 after reporting second-quarter earnings fell 67%.
Other stocks reacting poorly to earnings news included 99 Cents Stores, down $2.75 to $40.50; Nu Skin, down $3.13 to $11.63; and MiniMed, down $7.50 to $74.50.
* Chase Manhattan became the latest of many banks and brokerages to report strong second-quarter earnings. Its stock rose 44 cents to $81.31.
* Allergan dove $17.69 to $92.56. An advisory committee to the U.S. Food and Drug Administration voted against recommending approval of the company’s new therapy for the treatment of moderate-to-severe chronic dry-eye disease, or keratoconjunctivitis sicca.
Market Roundup, C10
