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Broad Market Slips; Some Tech Stocks Fall Hard

July 08, 1998| From Times Wire Services

NEW YORK — U.S. stocks faltered Tuesday in a bid at new highs despite an encouraging start to a profit-reporting season that will determine if the market's sudden rebound is justified.

The dollar fell against the Japanese yen on speculation Japan could unveil permanent income tax cuts before parliamentary elections Sunday. Oil prices fell, bond yields edged higher and gold rose.

The Dow Jones industrial average fell 6.73 points to 9,085.04 after giving back a 59-point gain that briefly put the blue-chip barometer at 9,150 and just a modest rally away from May 13's closing record of 9,211.84.

Most broad-market indexes also turned lower in the afternoon despite a burst of enthusiasm over a strong profit report from Alcoa, the first of the Dow's 30 components to step forward with its second-quarter results.

Internet stocks dominated the most-active lists again, but this time pulled back as investors locked in some of the monstrous gains produced by the speculative frenzy of the past week. The technology-heavy Nasdaq composite index lost 1.36 points to 1,908.11.

Even Alcoa retreated by the close, finishing just 69 cents higher at $65.69 despite jumping more than $3 after the aluminum producer reported a better-than-expected profit of $207.1 million for the second quarter.

Analysts said the market was pausing to consolidate recent strong gains as second-quarter earnings reports begin hitting the tape en masse next week.

"We have had a good rally in the market over the last couple of weeks, so you just need a day to pause," said Tony Dwyer, chief market strategist at Ladenberg Thalmann.

U.S. bond prices posted the biggest loss in almost three weeks. The price of the benchmark 30-year bond fell to push its yield up to 5.60% from 5.57% Monday, matching a record low.

Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange, where composite volume totaled 630.24 million shares, up sharply from Monday's tally of about 515 million.

The Standard & Poor's 500, which on Monday closed at a new high for the fifth time in eight sessions, slipped 2.67 points to 1,154.66.

The NYSE composite index fell 1.06 points at 589.76 after flirting with a third straight record high. The Russell 2,000 index of smaller companies fell 0.93 point to 459.04.

Momentum was still to the upside.

"You just cannot stand in the way of the market. The money flow is there and driving the big names higher," Dwyer said.

Among Tuesday's highlights:

* The Dow's loss came despite big gains from J.P. Morgan, up $4.13 to $122.69, and Johnson & Johnson, up $2.19 to $74.56. The Dow's biggest decliners were Union Carbide, down $2.13 at $53.50, and Procter & Gamble, down $2.06 at $91.94.

* Oil stocks were hit by a drop of 30 cents to $13.62 a barrel in the price of crude.

Chevron fell $1.94 to $82.69, while DuPont, which owns Conoco, was down $1.56 at $76.63. Mobil was off $1.63 at $76.88.

* A bout of inevitable profit-taking in the Internet sector took the wind out of the influential technology sector's sails, analysts said. Yahoo fell $8.25 to $191 after surging $26 on Monday, and Amazon.com fell $17.38 to $122.13 after soaring $15 the prior day. Lycos--another big gainer Monday--tumbled $14.56 to $85.

Defying the drop in Internet shares, Inktomi rose for a fourth day, up $2.88 to $76.50.

Egghead.com, which sells software and computers over the Internet, gained, rising 69 cents to $15.50.

In currency trading, the dollar erased Monday's gains to stand at 138.75 yen late in New York, down from 140.15 late Monday.

Market Roundup, D9

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