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Stocks Mixed as Nasdaq Slips; Pound Soars

May 07, 1997|From Times Staff and Wire Reports

The Dow Jones industrial average eked out another new high Tuesday, but most stock indexes dipped as investors secured some profits from the market's stunning rebound of recent weeks.

Elsewhere, bonds were little changed for a second day after the Treasury's sale of $17 billion of three-year notes met with adequate demand from investors.

In currency trading, the British pound soared after Britain raised interest rates and set a plan to make the nation's central bank independent.

On Wall Street, the Dow traded in a narrow range all day and closed up 10.83 points at 7,225.32, surpassing the previous day's record of 7,214.49 and setting its 17th high for the year.

But the streaking Nasdaq market of mostly smaller stocks finally ran into some profit taking, especially in the technology sector. The Nasdaq index dipped 10.94 points to 1,328.30, after rocketing nearly 11% in the previous six sessions.

Most other indexes also were down slightly for the day, while winners and losers were nearly evenly matched on Nasdaq and on the New York Stock Exchange. Trading continued to be very heavy, with NYSE volume reaching its seventh-heaviest ever.

After a deep sell-off in March and April, the bulls began to run again on Wall Street last week, after economic data suggested that the Federal Reserve Board may be content to leave interest rates alone in the near term.

Optimism also soared as President Clinton and Republican leaders reached an agreement on a balanced-budget plan that includes an as-yet-undetailed cut in capital gains taxes.

On the economic front, new data released Tuesday showed that the vigorous economic pace of the first quarter may indeed be slowing.

The Commerce Department reported that orders to U.S. factories slipped 1.6% in March, the largest drop in seven months.

But that news failed to rally the bond market. In fact, the yield on the benchmark 30-year Treasury bond rose to 6.89% from Monday's eight-week low of 6.87%.

At the auction of three-year notes, the average yield was 6.438%. Today the government plans to sell $12 billion in 10-year notes.

In currency trading, the British pound jumped to $1.6330 in late trading from $1.6230 late Monday. A rise in British interest rates by the Bank of England helped bolster the currency. (Story, D1; Investor Spotlight, D7.)

Among Tuesday's market highlights:

* Prominent Dow gainers were cyclical issues, which are more dependent on the economic pace and hadn't risen as sharply in the recent rally. DuPont rose 2 1/4 to 110 1/4, Alcoa rose 1 3/4 to 72 3/8, General Motors rose 1 to 58 5/8 and Union Carbide rose 1 to 49 3/4.

* Philip Morris was the Dow's weakest issue, falling 2 3/8 to 41 3/4. It surged Monday on news that a Florida jury had cleared RJR Nabisco of liability for the death of a longtime smoker. RJR also retreated, falling 2 3/8 to 30 1/4.

* The bellwether technology issues that led the recent Nasdaq advance gave back a bit. Intel fell 4 1/2 to 158 after reports of a possible flaw in its new Pentium II microprocessor. Microsoft fell 2 11/16 to 117 5/16.

Other tech losers included Compaq, down 3 to 90; Xylan, down 2 1/8 to 18 7/8; and Motorola, off 2 1/8 to 61.

America Online rose, then fell 2 1/8 to 49 3/8 after reporting a surprising $2.64-million profit in the latest quarter.

* PairGain Technologies climbed 2 3/16 to 23 1/16, after introducing a product for upgrading computer networks.

* Among new stock issues, Southland-based Kaynar Technologies went public at 14 1/2 a share and rose to close at 16 on Nasdaq. The company makes fasteners and other products for the aerospace industry.

In foreign trading, many key markets continued to rise.

In Tokyo, Japanese stocks soared to a five-month high amid optimism that booming U.S. financial markets will boost foreign investor interest in Japanese equities.

The benchmark Nikkei-225 average rose 666.17 points, or 3.4%, to 20,180.92, its highest close since Dec. 17. It was also the benchmark's biggest one-day gain since Jan. 22.

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