It’s a Mixed Day as Bargain Hunters Move In
Stocks were mixed Wednesday as investors braced for a possible increase in interest rates but nonetheless went in search of bargains in the battered technology sector.
The Dow Jones industrial average fell 18.37 points to close at 10,577.89. The index had dropped as much as 131 points earlier in the session before recouping most of the losses in the final hour.
Broader stock indicators finished slightly higher after paring big losses. The Standard & Poor’s 500 rose 0.55 of a point to 1,294.81, and the technology-heavy Nasdaq composite index rose 20.38 points to 2,432.41.
An afternoon speech by Federal Reserve Board Chairman Alan Greenspan helped calm a jittery market. The influential policymaker kept his remarks at an international business conference in Boston tightly focused on trade and did not address interest rates.
“The biggest bull market in history has been aided and abetted by a friendly Fed,” said Larry Wachtel, a markets analyst at Prudential Securities. “Everyone is afraid of what will happen if the Fed turns unfriendly.”
Bond prices continued their tumble after the release of a robust report on new-home sales. But the price of the benchmark 30-year Treasury bond recovered slightly by the afternoon, with the yield falling to 5.93%, down from 5.94% on Tuesday.
A yield of 6% is seen as a critical point for stocks, because at that level, bonds’ higher yields could make them a more attractive investment.
Interest rate worries depressed financial stocks, with J.P. Morgan falling $2.63 to $130.88. The sector is vulnerable to higher interest rates because lending volume shrinks when it becomes more expensive to borrow.
Investment firms, including online brokerages, also fell on interest rate concerns. DLJ Direct lost $5.13 to $33.63. Analysts said Merrill Lynch’s announcement Tuesday that it plans to launch an online service put additional pressure on the brokerage sector. Merrill Lynch shares dropped $4.56 to $70.69.
Tech companies began the day with yet another tumble, but their prices enticed some buyers later in the session. Intel, which has slipped amid concerns about its earnings outlook, rose $1.25 to $51.94.
Yahoo rose $4.31 to $142.50, buoyed by news that Sprint’s PCS Group will offer Yahoo content to users of its wireless phones.
Declining issues outnumbered advancers by a 6-5 margin on the New York Stock Exchange, where volume was moderate.
The NYSE composite index fell 0.78 of a point to 620.50, and the Russell 2,000 index of smaller companies fell 0.72 of a point to 436.74.
In currency trading, the euro fell to a record low close against the dollar amid pessimism about Europe’s economy and on speculation that the European Central Bank won’t bolster the unified currency by buying it. Currency traders sold the euro after ECB President Wim Duisenberg made no strong statements in support of the euro in a news conference after the bank’s council meeting.
“You’d think that with the euro at all-time lows, he’d be more adamant in its defense,” said Hugh Walsh, a trader at Commerzbank.
The euro fell to $1.036 from $1.044 the day before, bringing its loss against the dollar to 11.2% since its January introduction.
Among the U.S. highlights:
* Marimba nose-dived $11.38 to $46 as the company, which makes products that help distribute and update software over the Internet, fell on concern about its market valuation. Marimba saw its market value triple in April on its first day of trading, giving it a market capitalization of $1.38 billion. A Morgan Stanley Dean Witter analyst initiated coverage of the stock Wednesday with a “neutral” rating because of the “premium” valuation. The money-losing company also is facing a patent-infringement lawsuit from Novadigm, which develops Internet management software.
* Oil stocks rose as gasoline climbed more than 3%, its biggest gain in two months. Gasoline for July delivery rose 1.60 cents, or 3.4%, to 48.97 cents a gallon on the New York Mercantile Exchange. Sunoco trimmed output at a Philadelphia refinery because of low profit margins, cutting supply at the start of the peak driving season. Its shares gained 63 cents to $30.75. Exxon rose $1.50 to $80.25, and Chevron climbed $1.56 to $92.
* Sears gained $1.75 to $50.88 after the retailer’s stock was upgraded by analysts at Lehman Bros. “We want to get out in front of what we believe will be a very positive marketing update meeting for analysts on June 17,” Lehman said.
* AdForce plummeted $7.38 to $21.56 as the Internet advertising manager said it lost free Web page provider GeoCities as a customer after its sale to Yahoo.
* British Steel’s American depositary receipts rose $3.81 to $26 as Royal Hoogovens, Europe’s eighth-largest steelmaker, said it is in merger talks with rival British Steel.
Market Roundup, C7
