WSJ:
Stocks Inch Lower
As Bonds Weaken
Along With Dollar
By TERRI CULLEN
INTERACTIVE JOURNAL
Blue-chip stocks lost ground
Tuesday, hampered by weakness
in the technology sector and
worries about quarterly earnings.
The 30-year Treasury bond yield
bounced off Monday's record low
and the dollar traded mixed against
the mark and yen.
An early run at a new high
faltered in the last hour of trading,
with the Dow Jones Industrial
Average finishing down 6.73 to
9085.04 after coming to within 61
points of its May 13 closing high of
9211.84.
The Standard & Poor's
500-stock index edged down 2.68
to 1154.65 and the New York
Stock Exchange Composite Index
eased 1.06 to 589.76. Both
finished at new highs Monday.
Blue chips found some support
from Aluminum Co. of America's
better-than-expected
second-quarter results. While net
income was flat for the period,
earnings excluding items climbed
6%, handily beating analysts'
estimates. Alcoa's shares rose 5/8
to 65 5/8.
But overall the market was
weak, with investors preoccupied
by jitters about Asia's impact on
second-quarter earnings at U.S.
multinationals, said Peter Cardillo,
a senior vice president at Westfalia
Investments Inc.
In particular, he said, investors
are nervously awaiting profit results
due out after the close of trading
from Motorola. Investors will be
watching to see if the company,
which has been suffering from a
depressed semiconductor market
and its own internal woes, will
outperform Wall Street's
diminished expectations. "There
are hopes that Motorola is going to
show some improvement in its
outlook," he said. "But for now it's
wait-and-see." Motorola's shares
closed up 1 7/16 to 55.
Meanwhile, some profit-taking
in the technology sector weighed
on the Nasdaq Composite Index,
which dropped 1.40 to 1908.11.
The Russell 2000 index of
small-capitalization shares shed
0.93 to 459.04.
After sending Internet-related
stocks into orbit Monday,
investors moved in quickly on
Tuesday to secure some gains.
Shares of Lycos, which paced the
sector's rally Monday, tumbled 14
9/16 to 85.
In the bond market, the
30-year Treasury bond continued
to follow closely the movements of
the dollar against the yen. Bonds
also came under some profit-taking
pressure after Monday's afternoon
rally pushed the yield on the
bellwether 30-year bond to
5.57%, the lowest level since
auctions of 30-year bonds began in
1977.
The dollar dropped against the
yen after a Japanese government
official said Prime Minister Ryutaro
Hashimoto is prepared to
permanently cut taxes to aid
Japan's troubled economy. But the
U.S. currency edged higher against
the mark following another sharp
slide in Russian financial markets.
The mark often tracks
developments in Russia, since
many large German banks are
heavily exposed to the region.
Worries mounted about the
solvency of the Russian
government Tuesday after oil giant
British Petroleum pulled out of the
bidding for a controlling stake in
state-owned oil company Rosneft,
and Russian media said the
government may put off the
long-anticipated sale until the end
of the year. But Russia said it was
near agreement with the
International Monetary Fund on a
package of aid.
World-wide, stocks rose in
dollar terms. The Dow Jones
World Stock Index was up 0.41 to
196.61 as of 4 p.m. EDT.
In major market action:
Stocks stalled. Volume was
active at 627.8 million shares on
the New York Stock Exchange,
where 1,527 stocks advanced and
1,470 declined.
Bonds eased. The Treasury's
benchmark 30-year bond slipped
nearly 3/8 point, or $3.75 for each
$1,000 face amount. Its yield,
which moves in the opposite
direction of its price, rose to
5.59%.
The dollar was mixed. It was at
138.60 yen and 1.8143 marks,
compared with 140.22 yen and
1.8123 marks late Monday in
New York. |
