Stocks and the Dollar Give Up More Ground
Most stocks ended lower Wednesday despite another technology-led rally on Nasdaq--and some very hot Internet-related new issues.
Meanwhile, the dollar continued to slide against the yen and the euro.
After an early advance, the Dow industrials eased 6.97 points to 10,972.07, failing to follow through on Tuesday’s 115-point gain.
The Nasdaq composite rose 26.51 points, or 1%, to 2,705.84, buoyed by major semiconductor and Internet shares.
But losers topped winners by 20 to 19 on Nasdaq and by 16 to 13 on the New York Stock Exchange in continued uninspired trading.
Federal Reserve Chairman Alan Greenspan, testifying before the Senate Banking Committee, said little new with regard to the Fed’s interest rate stance. He essentially repeated the testimony he gave to the House last week.
That made for a dull day in the bond market. The 30-year Treasury bond yield was unchanged at 6.01%. A Treasury auction of $15 billion in two-year notes went well. The yield was 5.54%.
The government today is expected to report that the economy grew at an annual pace of 3.4% in the second quarter, according to a Bloomberg survey. That’s down from 4.3% in the first quarter, though still a heady pace.
But whether that is enough to fuel inflation pressures--and cause the Fed to tighten credit again--remains to be seen.
The suddenly weak dollar also is potentially inflationary, because it could lead to higher import prices.
The dollar fell to a five-month low of 116.12 yen as foreigners buying Japanese stocks sold dollars in favor of yen. Early today in Asia, the dollar fell below 116 yen.
Japanese stocks gained 0.7% and most other Asian markets rose.
The euro, meanwhile, neared $1.07 amid rising optimism about Europe’s economy.
But Greenspan told Congress that concerns about foreigners’ dumping U.S. assets because of the slumping dollar were “overdone.”
On Wall Street, technology stocks again took the spotlight.
Overall, though, analysts said sluggish trading volume suggests that many investors are sidelined after stocks’ recent slide.
Among Wednesday’s highlights:
* Battered Net stocks rose. Yahoo jumped $11.69 to $143, America Online added $4.56 to $102.75, EBay surged $5.38 to $104.94 and CMGI shot up $7.88 to $98.13.
But Mindspring Enterprises slid $4.75 to $35.50. While Mindspring beat analysts’ expectations for its second-quarter earnings, the company warned that profit will slide in the next three quarters as marketing costs increase.
* Some Net-related new issues zoomed. Drugstore.com, an online pharmacy, leaped $32.25 to $50.25 on its first trading day. Networking software firm Packeteer leaped $13.38 to $28.38. But online sports entertainment programmer Quokka Sports was a dud. It went public at $12 and closed at $11.38.
* Energy stocks were higher as gasoline futures reached 22-month highs on worries about supplies.
Market Roundup, C9
