Wednesday, Oct. 7, 1998
Dow edges up 16 points as earnings reports begin
Blue chips surrender day's early 154-point gain as tech-heavy Nasdaq declines falls even further
NEW YORK -- Blue-chip stocks escaped with a slim gain, but most stocks fell Tuesday despite a decent start to the flow of company reports on the just-ended quarter.
The Dow Jones industrial average finished just 16.74 higher at 7,742.98 after shedding an early 154-point gain and briefly dipping into negative territory.
Broader stock indicators turned lower for good in the afternoon as the momentum from Monday's late rebound and a rally on foreign markets quickly faded.
The technology-heavy Nasdaq composite index took the biggest hit again, initially recovering 40 of the 78 points lost in Monday's tailspin, but falling another 25.86 to 1,510.83 by the close.
``The market is still trying to find direction,'' said Don Hays, director of investment strategy at Wheat First Union of Richmond, Va. But, he added, the huge rally in the Treasury bond market, a traditional haven in jittery times, helps support stocks by lowering borrowing costs and making the payoff on bonds less attractive. Bond prices slipped a bit Tuesday, ending a five-session streak of 30-year lows on long-term bond yields.
``It's significant that the last couple of days, including this one, that the market's tried to move down to the previous low and bounced up nicely,'' said Hays. ``There's been a tremendous improvement in (interest) rates the last week or two that more than justifies the support in the market.''
Encouraging earningsThe opening strains of the third-quarter reporting season were mildly encouraging, but the latest results posted by Alcoa and Motorola were hardly robust enough to alleviate worries about a global economic slowdown.
Profits fell 5 percent at Alcoa compared with the same quarter last year and Motorola lost $42 million, but both companies beat Wall Street's deflated expectations.
The Dow, which is almost 1,600 points below its July 17 peak of 9,337.97, would have broken even on the day if not for Alcoa, which surged 4 5/16 to 72« following Tuesday's report by the aluminum maker. Likewise, Motorola's gain of 3¬ to 41 13/16 was masked by another day of steep losses in the technology group.
The Dow lost 58 points on Monday after rallying back from a 232-point slide, but most stocks fell sharply amid doubts that this week's multinational talks in Washington will produce any concrete plan to stabilize the global economy.
Analysts said the markets would be watching closely to see if U.S. officials succeed in working out a multibillion-dollar rescue package for Brazil, the latest country to be threatened by the financial turmoil in Asia and Russia.
Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, where composite volume totaled 993.84 million shares, up from 962.93 million on Monday.
The Standard & Poor's 500 fell 3.97 to 984.59, the NYSE composite index fell 0.93 to 491.51, and the American Stock Exchange composite index fell 0.12 to 593.09. The Russell 2000 index of smaller companies fell 4.25 to 332.55.
Tokyo's key stock gauge rose 0.6 percent to close back above 13,000 after falling Monday to its lowest level in more than 12 years. Prime Minister Keizo Obuchi ordered his Cabinet to speed up measures to spur business with tax cuts and public spending after forecasters warned the Japanese economy will likely shrink for a second straight year.
Major stock indexes shot higher in Europe, with shares closing up 4.4 percent in London, 5.3 percent in Paris and 3 percent in Frankfurt, Germany.
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