NEW YORK (CNNfn) - The same old problems kept Wall Street beaten down Wednesday, as investors kept their eyes on the U.S. economy and the situation in Asia.
The Dow and the Nasdaq took turns jumping in and out of negative territory as the market weighed the impact of Japan's newly picked finance minister and two key U.S. economic reports due out this week.
Thursday, the employment cost index arrives, and Friday, preliminary second-quarter figures for gross domestic product will come out. Some on Wall Street suspect the GDP will be flat to negative for the first time in seven years, signaling a slowdown in the U.S. economy.
"The market in general is in a state of confusion and bewilderment," said Bill Meehan, chief market analyst at Cantor Fitzgerald in Stamford, Conn. "We continue to see very poor breadth on a daily basis."
The Dow Jones industrial average closed down 19.82 at 8,914.96. Declines led advances on the New York Stock Exchange 1,641 to 1,313 on a trading volume of 640 million shares.
The Nasdaq Composite ended 15.04 lower at 1,881.49 and the S&P 500 index fell 5.03 to 1,125.21.
The bond market fell slightly, even though the dollar strengthened against the yen. Investors kept a nervous eye on the stock market and the White House scandal involving President Clinton and former intern Monica Lewinsky, as well as the pending economic reports. The benchmark 30-year Treasury bond closed down 11/32 of a point in price, raising the yield to 5.76 percent.
The dollar traded higher against the Japanese yen amid reports that Japan may try new plans to stimulate growth and Kiichi Miyazawa reluctantly agreed to become finance minister at the request of the presumptive next prime minister, Keizo Obuchi. The greenback stuck to a narrow trading range against the German mark.
Market struggles
Although some blue chips showed strength, most of Wall Street remained mired in the market's nagging problems.
"We sure had a reaction in the last six or seven days," said Dodge Dorland, chief investment officer at Landor Investment Management. Despite the drop, he sees a bounce in the market soon. (411K WAV) or (411K AIFF)
Leading the way among Dow heavyweights, IBM (IBM) rose 3 to 128-7/16 after a boost from Merrill Lynch. The New York brokerage added Big Blue to its "Focus One List" of highly recommended stocks.
Fellow Dow member American Express (AXP) also rose after CBIC Oppenheimer increased its rating and started covering the company as a "strong buy." The stock was up 1/2 at 112-3/4.
In the banking sector, shares of J.P. Morgan (JPM) rose on a report in a Swiss newspaper about a possible alliance with Credit Suisse Group. Neither company would comment on the report. J.P. Morgan was up 5/16 at 123-11/16.
But uncertainty about the settlement of an auto strike ate away at Dow component General Motors (GM). United Auto Workers approved a pact on Wednesday. The stock fell 1/8 to close at 74-1/8.
Also losing ground, Merck (MRK) ended 1-3/16 lower at 123-5/16, even after announcing a $5 billion stock buyback and increasing its quarterly dividend by 9 cents.
Elsewhere in the market, shares of MCI Corp. (MCIC) rose after being one of the top bidders in Brazil's privatization of its telephone company Telebras. MCI closed up 1-3/16 at 65. American depositary receipts of Telebras (TBR) rose 4-15/16 to 118. Another ADR, Telefonica of Spain (TEF), surged after becoming another successful bidder. Telefonica closed up 5-13/16 at 155-3/16. Telefonica and Telebras were among the top gainers on the Big Board.
Rioting broke out in Rio de Janeiro over the Telebras auction, which is the largest sale of government assets in Latin American history. Brazil raised more than $22 billion.
Cendant Corp. (CD), which has been beleaguered by accounting problems and anger from shareholders, rose after embattled chairman Walter Forbes resigned Tuesday. The stock ended 1-3/8 higher at 18-3/8 and was the most heavily traded on the NYSE.
Boston Scientific (BSX), a surgical medical supplier, surged 5-11/16 to 76-1/8 after J.P. Morgan upgraded the company to "buy" from "long-term buy." The stock was another gainer on the NYSE.
Among big technology stocks, Dell and Intel were the most active on the Nasdaq. Dell (Dell) fell 7/8 to 107-3/8, while Intel (INTC) dropped 1 to 84-5/8.
Although most of Wall Street suffered minor losses, two sectors were hit harder. The Dow transports index dropped 68.87, or 2.08 percent, to 3,244.93, amid weakness in airline stocks. AMR, (AMR) the parent of American Airlines, lost 1-1/2 to 72-7/16, while UAL, (UAL) the parent of United Airlines, slipped 2-5/16 to 77-5/8. Delta Air Lines (DAL) dropped 4-3/4 to 125-1/4.
Internet stocks also got stung. Internet search engine Yahoo! (YHOO) dropped 9-11/16 to 173-9/16, while Internet bookseller Amazon.com (AMZN) lost 11-1/8 to 107-13/16, topping the list of net losers on the Nasdaq. On the Big Board, America Online (AOL) shed 6-1/2 to 107-3/4.
(Click here for a look at today's CNNfn market movers).
-- by staff writer Martine Costello
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