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Dow Declines as Dollar Rises Against Yen

June 19, 1998| From Times Wire Services

NEW YORK — Wall Street stocks closed lower Thursday and bond prices rose as the dollar rebounded against the yen in a continued reaction to the previous day's surprise U.S. rescue of Japan's ailing currency.

The Dow Jones industrial average dropped 16.45 points to close at 8,813.01, a day after soaring 164 points when currency intervention propelled the battered yen higher.

"You'd have to conclude that the animal spirit has gone out of the stock market," said Wayne Nordberg, a market analyst at Lord, Abbett & Co., asserting that Wednesday's advance wasn't as impressive as the Dow's gain would suggest. "If you look at the internals of the market [on Wednesday], it was a tale of very few stocks driving the S&P 500."

Broader indexes also posted small losses Thursday despite a strong day in Asia, where stocks rallied following Wednesday's move by the Federal Reserve Bank to bolster the sagging Japanese yen.

For the first time since 1992, the U.S. central bank sold dollars for yen in the currency market, helping the Japanese currency reverse its slide to an eight-year low.

Tokyo's Nikkei stock average jumped 4.4% on Thursday, and other Asian markets posted even bigger gains amid renewed hope for economic stability in the region.

Hong Kong's main stock index rose 6.4%, Thailand's rose 8.1%, South Korea's rose 7.1%, and Indonesia's rose 5%.

The dollar rebounded against the yen as large investment funds dipped in to buy the currency at what they saw as a bargain rate. The dollar rose to 137.83 yen in late New York trading from 136.37 Wednesday.

Bonds gained alongside the dollar, in part on a report showing that the U.S. trade deficit widened to a record $14.5 billion in April as exports and imports fell, a sign that sagging demand from overseas is slowing the U.S. economy.

The bellwether 30-year Treasury bond ended up slightly to yield 5.69%. On Wednesday, the yield, which moves in the opposite direction from price, was 5.74%.

On Wall Street, leading industrial stocks suffered as traders waited for Japan to move decisively in tackling its ailing economy.

Declining issues outnumbered advancers by a 7-to-4 margin on the New York Stock Exchange, where volume totaled 713.74 million shares, down sharply from Wednesday's hectic pace of 877.50 million.

The Standard & Poor's 500 fell 0.74 of a point to 1,106.37 after surging 19 points on Wednesday, while the technology-heavy Nasdaq composite index fell 3.70 points to 1,772.70.

The NYSE composite index fell 1.16 points to 567.49, and the Russell 2,000 index of smaller companies fell 4.29 points to 439.79.

Today marks the "triple-witching" expiration of options on common stocks and stock indexes, and futures on stock indexes. The expiration often creates volatile markets as investors buy and sell shares to offset their options positions.

Among Thursday's highlights:

* Technology shares were prominent among the Dow's big decliners, with IBM falling $2.19 to $108.81 and Hewlett-Packard falling $1.81 to $56.69. Elsewhere in the Dow, Disney fell $2.31 to $112 and Chevron fell $1.75 to $81.94, negating a big gain by McDonald's, which rose $2.56 to $67.88 following Wednesday's news that it was cutting its headquarters staff.

* Tobacco stocks bucked the market's drop after the Senate abandoned a hotly debated bill that would have, among other anti-smoking measures, raised cigarette taxes by an estimated $1.10 a pack.

Philip Morris rose $1.13 to $39.56. RJR Nabisco Holdings gained 75 cents to $25.06, but Loews fell 56 cents to $89.63.

Market Roundup, D6

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