Rate, Currency Fears Drag Stocks Lower
Stocks finished broadly lower Tuesday on continuing jitters over interest rates and the dollar.
The Dow industrials slid 120 points, or 1.1%, to 10,910.33, and losers swamped winners by 21 to 8 on the New York Stock Exchange in moderate trading.
Financial stocks were particularly weak. The Standard & Poor’s financial index slumped 1.8%.
But the Nasdaq composite, after diving on Monday, snapped back with a gain of 0.8% as major semiconductor stocks surged.
The government’s report of robust retail sales in August drove long-term bond yields higher, as investors focused on the possibility of another Federal Reserve interest-rate hike to slow the economy. The bellwether 30-year Treasury bond ended at 6.12%, up from 6.05% on Monday.
The weak dollar also put more pressure on bonds. The dollar slipped to a fresh three-year low against the yen, falling to 105.79 yen in New York from 106.44.
The dollar pared some of its losses after Treasury Secretary Lawrence Summers again said the U.S. favors a strong currency.
But it’s the yen that is strong now, as money flows into Japan on optimism about a continuing economic recovery.
Meanwhile, in commodity trading oil pulled back from 2 1/2-year highs. Near-term crude oil futures in New York eased to $23.86 a barrel from $24.21 on Monday.
Among Tuesday’s highlights:
* Financial stocks sliding included Bank of America, down $2.69 to $56.50; Wells Fargo, down $1.88 to $38.13; Knight/Trimark, off $2.44 to $31.63; and Goldman Sachs, down $2.75 to $59.38.
* Some insurance shares fell on worries about potential losses from Hurricane Floyd. Allstate sank $1.44 to $32.13, Cigna slumped $2.06 to $87.38, American International Group lost $1.63 to $91.50 and Chubb slid $1.25 to $56.06.
* On the plus side, semiconductor-related shares were hot as James C. Morgan, head of chip-manufacturing-equipment-maker Applied Materials, said chip production worldwide should more than double in the next few years as the Internet feeds heavy demand for computers.
Applied shares soared $5.56 to $81.56, Intel gained $1.44 to $85.81, Teradyne leaped $3.88 to $41.88 and Vitesse Semiconductor soared $5.06 to $85.06.
Also, Motorola rebounded $2.81 to $93.19, and General Instrument gained 81 cents to $50.50. The two are expected to announce merger plans today.
* Internet shares resumed their rally, led by Juniper Networks, up $3.13 to $183.13; RealNetworks, up $7.31 to $91.44; and Homestore.com, up $3.19 to $57.75.
* Herbalife class B shares rocketed $5.53 to $14.69 after the company’s chief executive, Mark Hughes, said late Monday that he will offer $17 a share to take the Los Angeles-based nutritional supplements maker private.
* MRV Communications sank $1.31 to $23.50. A co-founder of the Chatsworth-based fiber-optics firm said Monday that he would resign.
* Halliburton fell $1.25 to $49.06, rebounding from a deeper loss after the oil services firm doubled its estimate of cost savings from its 1998 purchase of Dresser Industries.
Market Roundup, C9
