Stocks End Mixed; Euro Rises Again
Stocks struggled Tuesday to another mixed close, while the bond market’s rally stalled and the dollar lost more ground against the resurging euro.
The Nasdaq composite index fell 17.72 points, or 0.9%, to 1,964.53 as investors continued to chip away at tech stock prices.
The Dow industrials eased 3.74 points to 10,412.17 in a second straight session marked by little movement in prices.
Even so, winners topped losers by 19 to 12 on the New York Stock Exchange, and losers had a slight edge on Nasdaq.
“It’s been like watching the EKG of a potato,” said Todd Clark, co-head of trading at WR Hambrecht. “The market is doing nothing because we have every reason to do nothing.”
Many investors are wary of making new stock bets in an environment where corporate earnings still are declining.
Expectations of another interest rate cut when Federal Reserve policymakers meet Tuesday aren’t providing fuel for a stock rally, analysts note. The Fed has already cut rates six times this year, but the economy has yet to show convincing signs of a turnaround.
In the Treasury bond market, where yields have been sinking in recent weeks anticipating lower Fed rates, buyers pulled back Tuesday, leaving yields mostly unchanged.
Some traders said retail sales data reported Tuesday may encourage the Fed to wait before cutting rates again.
But many bond investors believe that a quarter-point cut in the Fed’s key short-term rate, now 3.75%, is a sure bet next week.
“Nothing in this report changed the Fed’s playbook,” Mitch Stapley, who manages $4 billion at Fifth Third Investment Advisors in Grand Rapids, Mich., told Bloomberg News.
In currency trading the euro rose further Tuesday, closing at 90.2 U.S. cents in New York, up from 89.8 cents Monday and the highest in nearly four months.
The International Monetary Fund said the dollar may be “at risk for a sharp depreciation.”
The size of the U.S. current account deficit does not appear sustainable “in the longer term,” and the dollar might be vulnerable to a decline, “particularly if productivity performance proved disappointing,” the IMF said in a report.
The dollar also fell against the yen, ending at 121.74 yen, versus 122.48 Monday.
The dollar has been the strongman of world currencies in recent years, in part because foreigners have been eager to invest in U.S. assets.
But there are “concerns the U.S. may not be able to draw the same kinds of [investment] flows that it has,” Andrew Delano, a currency analyst at IDEAglobal.com, told Bloomberg News.
Among Tuesday’s market highlights:
* Some retail issues gained, including Sears, up 77 cents to $45.40; Best Buy, up $2.80 to $61.09; and Ann Taylor, up $3.07 to $34.55.
* Some trucking shares also were strong, including Roadway, up $1.27 to $26.63, and USFreightways, up $1 to $35.10.
* Many tech shares lost ground, including PMC-Sierra, down $1.39 to $34.86; Cisco Systems, down 56 cents to $17.65; and Adobe Systems, down $1.35 to $34.50.
Also, AOL Time Warner slid $3.34 to $39.65. Morgan Stanley Dean Witter & Co. analyst Mary Meeker lowered her 2001 and 2002 revenue and cash-flow forecasts for the media and Internet giant, citing “ongoing weakness in advertising spending” in the slow economy.
* Some health-care issues attracted buyers. Winners included Baxter International, up $1.06 to $51.87; and Johnson & Johnson, up $1.29 to $56.99.
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Market Roundup, C8-9
