Share this article

print logo


A late rally salvaged a record-setting streak by some stock indexes, but blue-chip shares pulled back Tuesday after some discouraging earnings news and a stumble in the recent bond rally.

The Dow Jones industrial average took another short-lived trip above 8,000 in early trading, but quickly turned lower and fell 26.77 to close at 7,970.06.

Broader measures were mixed, with the Russell 2000 index of smaller companies and the Nasdaq composite index shooting into positive territory during the final half hour.

The late rally, which also trimmed a 67-point loss by the Dow, gave the Russell 2000 its eighth straight closing high and the Nasdaq its fourth straight. The record was also the 17th in 19 sessions for the Russell 2000.

It was the third time in four sessions that the Dow failed to hold above the 8,000-mark.

Although the past week's gains made the Dow vulnerable to some profit-taking, said Smith Barney strategist A. Marshall Acuff Jr., Tuesday's selling "also suggests that the (blue-chip sector) doesn't seem ready yet to move to a new high."

Notably, even with a 250-point gain over the prior eight sessions, the Dow sat another 250 points shy of its early August peak coming into Tuesday's session.

Some disappointing earnings news late Monday from Delta Air Lines and Micron Technology set the stage for a rough start in the stock market on Tuesday. Complicating matters, interest rates rose in the Treasury market for the first time in eight sessions as bond traders locked in some of their recent gains.

Delta fell 4 5/8 to 102- 1/1 6 on the New York Stock Exchange after the carrier warned that it wouldn't meet Wall Street forecasts with its results for the current quarter.

Micron Technology slid 3 1/2 to 37 as the most active NYSE issue despite a seemingly robust profit report. The chipmaker's earnings for its latest quarter quadrupled compared with year-ago levels, but the results were shy of forecasts.

Aetna, meanwhile, tumbled 9- 1/1 6 to 93-1 1/1 6 as the second most active NYSE issue amid speculation that the insurer would guide analysts to lower their expectations for the company's third-quarter results.

The Dow's weakest components were Union Carbide, down 1-1 1/1 6 to 47- 5/1 6; AT&T, down 1- 5/1 6 to 44 5/8 ; and Wal-Mart, down 1-1 1/3 2 to 37- 1/1 6.

McKesson Corp. said it would pay $2.25 billion in stock and debt for AmeriSource Health Corp., a 32 percent premium over Monday's close of 53-1 1/1 6. AmeriSource jumped 6- 9/1 6 to 60 1/4 . McKesson gained 3-1 5/1 6 to 103 3/4 .

CompUSA Inc. rose 2 1/2 to 35 3/8 after the computer superstore retailer said its board authorized the repurchase of $60 million of its common shares, about 2 percent of the total outstanding.

Stanhome Inc., a marketer of branded gifts and collectibles, dropped 3- 9/1 6 to 30- 3/1 6 after saying slower sales and a charge will cause it to post a loss for the quarter.

BellSouth Corp. rose 9/3 2 to 47- 9/1 6 after it said it plans to buy back $1 billion in stock by the end of 1998.

Declining issues outnumbered advancers by a 6-to-5 margin on the NYSE, where volume totaled 526.72 million shares, up from 490.93 million in the previous session.

The Standard & Poor's 500-stock index fell 3.50 to 951.93; and the NYSE composite index, which on Monday closed at a record high for the first time since early August, fell 2.21 to 496.95.

The Russell 2000 rose 0.44 to 449.42, and the Nasdaq composite index rose 7.91 to 1,697.36 as several bellwether technology names outperformed the blue-chip sector: Intel rose 2 3/4 to 99 1/8 , and 3Com rose 1 5/8 to 52.

The American Stock Exchange composite index fell 4.49 to 685.45, snapping a seven-session streak of record highs.

Bond prices fell Tuesday for the first time in more than a week after an auction of $15.5 billion in two-year Treasury notes failed to generate enough enthusiasm among investors. The market also was weighed down by the sale of $1.75 billion in revenue bonds by the Massachusetts Turnpike Authority and concern about Wednesday's auction of $11.5 billion of five-year Treasury notes.

The price of the benchmark 30-year bond fell 7/1 6 point, or $4.38 per $1,000 in face value. Its yield rose to 6.38 percent from 6.35 percent late Monday.

There are no comments - be the first to comment