Advertisement
YOU ARE HERE: LAT HomeCollections

Market Savvy: A financial markets wrap-up with new
columns, features and briefs on stocks, mutual funds
and other investing topics. | FINANCIAL MARKETS

Blue Chips Fall on Fears About Japan's Impact

July 03, 1998|From Times Wire Services

NEW YORK — Stocks fell and the dollar soared against the yen Thursday amid concerns that Japan's economic woes would wash into quarterly earnings, especially in the technology sector.

Bonds yields fells on signs that the U.S. economy's runaway growth was slowing and that interest rates would be held steady for now.

Also weighing down stocks was a bout of profit-taking ahead of the long holiday weekend. All U.S. markets will be closed today in observance of Independence Day.

The Dow Jones industrial average ended off 23.41 points, or 0.26%, at 9,025.26. The blue-chip index ended the week 80.72 points ahead.

The technology-laden Nasdaq composite index suffered most among the main stock indexes, shedding 20.46 points, or 1.07%, to close at 1,894. The index was up 24.47 points from last Friday.

Profit-taking was inevitable, especially in technology stocks, after their recent run-up, analysts said. But stocks are poised to make further gains, they added.

"The market is in summer rally mode," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "The path of least resistance is higher."

Advancing issues outnumbered decliners by a 10-9 margin on the New York Stock Exchange.

The S&P 500 fell 2.14 points to 1,146.42, the NYSE composite index rose 0.20 point to 585.80, and the Russell 2,000 index of smaller companies fell 1.51 points to 458.31.

The price of the 30-year bond climbed, lowering its yield to 5.60%, the lowest closing level since the Treasury started selling the maturity in 1977. It was at 5.62% Wednesday. A spate of U.S. economic news was welcomed by the bond market, with signs that interest rates will hold steady.

New orders received by U.S. factories weakened by 1.6% in May, the biggest fall in 1 1/2 years. Also the nation's unemployment rate rose to 4.5% in June from the 28-year low of 4.3% reached in both April and May.

Much of that increase in unemployment resulted from Asia's economic crisis, with manufacturers that import from and export to Asia cutting back their payrolls. Also, hiring dropped in the auto industry, hurt by the June 5 strike at GM's stamping plant in Flint, Mich.

Thursday's decline followed a strong few weeks on Wall Street. The Dow has risen six of the last eight sessions, gaining 314 points. The blue-chip index rose more than 96 points on Wednesday, its first close above 9,000 in three weeks.

Both the S&P 500 and Nasdaq also are just shy of their all-time highs.

With the market still going strong, many investors chose to take profits Thursday to end the week with gains in their portfolios.

"We've seen an incredibly strong market, and that's caused some normal profit-taking," said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons Inc., in St. Louis. "No one wants to be real brave and hold on ahead of three-day weekend."

Among Thursday's highlights:

* Tech stocks got battered. Among the hardest hit were Sun Microsystems, down $2.44 to $42.50; Intel, off $1.94 to $73.25; and Microsoft, down $2.13 at $107.25.

* Semiconductor chip-equipment makers were lower after KLA-Tencor warned of lower expectations because of a slowdown in orders from chip makers.

KLA-Tencor fell $1.75 to $26; Applied Materials dropped 75 cents to $29.69; Lam Research declined $1.38 to $18.06; and Novellus Systems fell $2 to $34.50.

CompUSA, the largest U.S. computer retailer, also warned of bad news on profit. CompUSA said it will report an unexpected loss in the fiscal fourth quarter because of falling personal computer prices and weak demand.

CompUSA fell 69 cents to $16.88, bringing its decline for 1998 to 46%.

In currency trading, the dollar rose 2.92 yen, ending a two-day sell-off, after Japan added no new measures to its widely touted package of reforms to tackle an estimated $600 billion in bad loans.

The dollar closed at 140.99 yen, up from 138.07 Wednesday.

Overseas, Tokyo's Nikkei stock average rose 0.7%, Frankfurt's DAX index fell 0.3%, and London's FTSE-100 was up 0.7%.

Market Roundup, D6

Advertisement
Los Angeles Times Articles
|
|
|