YOU ARE HERE: LAT HomeCollections


Stocks Mixed in Another Sluggish Day

August 21, 1996|From Times Wire Services

Blue-chip stocks bounded higher Tuesday as the Federal Reserve Board's decision to keep interest rates unchanged removed what could have been a roadblock to the market's continued rally.

But the widely anticipated decision--already credited as a catalyst for several recent rallies--left the rest of the stock market little changed in another mixed and sluggish summer session.

The Dow Jones industrial average closed up 21.82 points at 5,721.26, putting the blue-chip index within a stone's throw of its record closing high of 5,778.00, set May 22. But the Standard & Poor's 500 list of large companies, which usually moves in sync with the Dow, slipped 0.89 point to 665.69, pressured by its heavier weighting with consumer-related businesses.

In the broader market, advancing issues led decliners 1,230 to 1,068 on moderate volume of 334 million shares on the New York Stock Exchange.

The recent stream of tame economic readings had made Tuesday's news on fed rate policy a foregone conclusion for many. In fact, investors confidence recovery was such that their buying made for a surprisingly quick rebound from last month's bruising sell-off. Back then, rampant inflation jitters had plagued the markets and nearly everyone thought a Fed rate hike was imminent.

The Nasdaq market was again weakest, weighed down by technology shares, which have seen a struggle in attempting to rebound the way other stocks have from July's tumbles.

"Investors remain skittish about the more volatile stocks," said Robert Streed, senior investment advisor at Northern Trust in Chicago. "I'm worried about tough earnings comparisons for technology stocks. There might be some disappointments out there."

The Nasdaq composite index fell 6.24 points to 1,124.67. Among its leading technology issues, Cisco Sytems fell 1 to 55 and Intel lost 1 1/4 to 79 1/2.

Major foreign markets were fairly quiet Tuesday, but evidence that Mexico's economy is back on a recovery track put Mexican markets in a buzz of excitement, with stocks closing at record highs and interest rates dropping to 19-month lows.

"Mexico has been trying to stage a recovery since the beginning of this year, and it's always been getting ahead of itself in terms of fundamentals," said Matthew Hickman of Lehman Bros. in New York. This week, however, second-quarter gross domestic product was reported up 7.2%, much stronger than most analysts had expected. Interest rates on government treasury bills, or cetes, in the secondary market fell on Tuesday to 23.90%, their lowest level since Jan. 25, 1995.

The Mexican stock market's main price index, the Bolsa, rallied 77.12 points, or 2.32%, to a record 3,401.79, with volume at a frenzied 159.89 million shares.

Among U.S. market highlights:

* Tobacco stocks were mostly higher, despite news that Kansas had become the 11th state and Arizona the 12th to sue the tobacco industry to recover Medicaid money spent to treat illnesses of smokers. Philip Morris rose 1 5/8 to 91 1/2, RJR Nabisco slipped 1/4 to 26 1/2, smokeless tobacco maker UST rose 1/8 to 31 3/4 and Loews added 1/4 to 77 7/8.

* HBO & Co., a maker of software for the medical industry, slumped 5 1/4 to 56 1/2 after a brokerage house downgraded its opinion of the company's performance.

* Griffin Gaming soared 7 1/8 to 19 3/8 on news of its plans to merge with Sun International Hotels. Sun International fell 3 5/8 to 48 1/8.

* Tylan General rose 2 7/8 to 13 1/8. The company said it is putting itself up for sale and added that it has already received some inquiries.

* First Data fell 3 1/2 to 77 3/8. Morgan Stanley cut its 1996 and 1997 earnings estimates for the firm.

Market Roundup, D6

Los Angeles Times Articles