Stocks Little Changed as Investors Step Back
Key stock indexes barely budged Tuesday as many investors stepped back, in part on renewed terrorism fears after the poison ricin was found in a Senate office.
The ricin news helped push some investors into the relative safety of Treasury bonds, sending yields lower. The dollar fell, hitting a three-year low against the Japanese yen.
The Dow Jones industrial average traded in a narrow range all day and closed up 6 points, or less than 0.1%, at 10,505.18.
The Nasdaq composite index inched up 3.06 points, or 0.2%, to 2,066.21, ending a five-day losing streak that was the longest since early August.
The Standard & Poor’s 500 added less than a point, to 1,136.03.
Winners had a slight edge over losers on the New York Stock Exchange, while losers had the edge on Nasdaq. Trading volume continued to ebb.
The discovery of a powdery white substance in a Capitol Hill office late Monday raised new concerns about terrorism and invoked memories of the anthrax attacks of 2001. The powder later tested positive as ricin, and all Senate office buildings were closed Tuesday.
Some analysts said the stock market still was feeling the effect of last week’s statement from the Federal Reserve, which many interpreted as a signal that interest rates could rise sooner rather than later.
“We’ve seen the market take on a different personality day by day,” said Stuart Freeman, chief equity strategist at A.G. Edwards & Sons.
“But I think the biggest issue on the minds of investors is when is the Fed going to raise rates and when is the market going to ‘rotate’ more in terms of sectors.”
Riskier stocks, including many tech issues and smaller names, led last year’s rally on Wall Street. But over the last week or so those issues generally have lost more than blue chips.
An S&P; index of 600 smaller stocks is down 3.7% since the broad market peaked Jan. 26, and the technology-dominated Nasdaq is off 4.1% in the same period. By contrast, the Dow index is down 1.8% in the period.
Treasury bonds attracted money Tuesday on heightened concern about terrorism. The yield on the 10-year T-note fell to 4.10% from 4.15% on Monday.
Bonds also were cheered after Federal Reserve Bank of Chicago President Michael Moskow, in a speech, said Fed officials expected the economy to grow more rapidly this year without causing inflation to accelerate. That lessened some investors’ fears about a credit-tightening move.
“We have yet to see the kinds of pressure on labor and capital resources that often signal an increase in inflation,” Moskow said in Indiana.
The dollar reacted negatively to the ricin news, falling to a three-year low of 105.50 yen, from 105.61 on Monday. The euro rose to $1.253 from $1.242.
“Any type of political risk tends to weigh on a currency because investors demand a premium to buy assets of a country” that may be the target of terrorism, Steven Englander, currency strategist at Barclays Capital, told Bloomberg News.
Currency traders are awaiting the meeting this weekend of the finance ministers of leading industrialized nations. Currency values are expected to be a major topic of discussion.
Among Tuesday’s market highlights:
* Many Internet-related names were sharply lower. Sohu.com, an operator of Chinese websites, plunged $7.50 to $30.41 after reporting disappointing fourth-quarter revenue.
Other losers in the Internet sector included Amazon.com, down $3.33 to $44.94; Netease.com, down $3.06 to $44.29; and Yahoo, off $1.21 to $45.49.
* Some bigger tech names rallied, including Intel, up $1.08 to $31.40; IBM, up 61 cents to $100; and SAP, up $1.23 to $41.82.
* Stocks rising on earnings reports included Colgate-Palmolive, up $1.51 to $51.85, and Avon Products, up $3.31 to $65.31. Avon also raised its quarterly dividend to 28 cents a share from 21 cents.
But hospital firm HCA fell $1.26 to $45.04 despite raising its quarterly dividend to 13 cents a share from 2 cents. HCA’s quarterly earnings missed estimates.
* One of the hottest stocks of recent months, Taser International, slid $7.81 to $127.21. The stun-gun maker soared as high as $154 early in the session after posting fourth-quarter earnings that beat expectations, but profit-takers then swarmed.
* In another sign that investors may have grown more wary in recent days, two initial public stock offerings got poor receptions. TRW Automotive, a leading auto parts maker, fell 90 cents to $27.10 on its first trading day. Biotech company GTX also slumped on its first trading day, losing $1.60 to $12.90.
Market Roundup, C6-7
