MARKET SAVVY : Most Stocks Fall; Dollar at 3 1/2-Year Low Against Yen
The broad market lost more ground Wednesday, although a fresh surge in Internet stocks helped lift Nasdaq.
In currency trading, the dollar continued to slump, falling to a 3 1/2-year low against the yen.
Although Wall Street sought equilibrium after Tuesday’s 225-point dive in the Dow Jones industrials, losers still outnumbered winners by nearly 3 to 2 on the New York Stock Exchange. They were about evenly matched on Nasdaq.
The Dow ended off 74.40 points, or 0.7%, at 10,524.07, its lowest close since June 11. The blue-chip index has fallen 7.1% from its Aug. 25 record high.
Most other indexes edged upward, however. And Nasdaq’s composite surged 1.3% after tumbling 2.3% on Tuesday.
Major Net stocks led Nasdaq’s gain, with Yahoo surging $9.94 to $179.50, its highest close since April.
Internet stocks are “the one area that people can feel confident about growth,” Henry Asher, president of money manager Northstar Group Inc., told Bloomberg News.
But with most stocks continuing to slide, some analysts say the market faces a tough road ahead.
“We have some downside momentum to work out, and there is very little good news,” said Joseph DeMarco, a managing director at HSBC Asset Management Americas, which oversees $2.5 billion.
One big fear is that the dollar’s weakness will drive more Japanese investors out of U.S. stocks and bonds. The dollar tumbled to a 44-month low of 103.93 yen Wednesday in New York, from 104.87 on Tuesday, after the Bank of Japan declined to take new steps that might weaken its currency.
Group of 7 officials gathering in Washington on Saturday aren’t expected to cooperate with Japan in selling yen.
They first want to see Japan take steps to bolster domestic consumer demand, rather than weaken the currency to boost exports, traders said.
Meanwhile, continuing strength in the U.S. economy could spur the Federal Reserve to raise short-term interest rates again when policymakers meet Oct. 5.
Still, many analysts believe the Fed will hold steady. And the Treasury bond market has been fairly calm in recent sessions, suggesting a lack of concern.
The bellwether 30-year T-bond yield was unchanged Wednesday at 6.09%. The yield has fluctuated little this month.
In foreign trading, Asian markets followed Japan lower Wednesday after the Bank of Japan’s inaction. A strong yen makes life tougher for Japanese exporters.
Japan’s Nikkei-225 index slid 3.4%, Hong Kong shares dived 1.7% and Singapore slid 2%.
Among Wednesday’s highlights:
* Blue chips leading the Dow’s decline included some major consumer issues: Procter & Gamble slid $2.25 to $98 and Coca-Cola dropped $1.31 to $52.44.
They may have been hurt as Gillette slumped $1.81 to $39.81 after a Salomon Smith Barney analyst cut her fourth-quarter earnings estimate to 40 cents a share from 45 cents, citing slower sales growth.
* Philip Morris and other tobacco stocks were hit by a major new government lawsuit against the companies. Morris slid $1.13 to $34.50, RJR Tobacco lost $1.19 to $27.31 and Loews lost $1.94 to $71.69.
* Major technology stocks were mostly higher after tumbling Tuesday. Apple gained $1.06 to $70.31, Cisco Systems added $1.13 to $72.25 and Micron Technology leaped $5.31 to $83.44.
Net stocks were much hotter, perhaps buoyed by the strong receptions for recent initial public offerings of Internet companies.
EBay jumped $8.50 to $149.13, Inktomi rocketed $9.06 to $138.31 and America Online rebounded $6.13 to $91.
Also, MindSpring Enterprises soared nearly 25%, rising $6.50 to $32.88, after the Internet service provider announced an alliance with Ceridian, a business services technology company.
* Many gold stocks continued to rebound as near-term gold futures climbed $3.90 to $264.10 an ounce, following Britain’s sale of gold this week at higher-than-expected prices. Placer Dome gained 63 cents to $11.50.
Market Roundup, C13
