|
Stocks hang in the black
|
 |
June 29, 1999: 1:50 p.m. ET
Dow, Nasdaq tread water as interest rate anxiety holds market bulls back
By Staff Writer Robert Scott Martin
|
NEW YORK (CNNfn) - Blue-chip stocks and technology shares alike were stranded firmly in positive territory Tuesday, as investors proved unwilling to do more than nibble at bargains while the Federal Reserve was meeting to determine the future of U.S. interest rates.
Traders said the stock market got a boost from the morning's simultaneous releases of new home sales, which came in weaker than expected, and consumer confidence figures, which remained at a 31-year high. Together, the data indicated that the U.S. economy's expansion remains under control, while an optimistic outlook should keep buying demand -- and hence, corporate profits -- on an upward course.
The news was also balm to investors who fear that the Federal Reserve's Open Market Committee (FOMC) will continue to ratchet U.S. interest rates upward over the rest of the year. However, although the market has now steeled itself to expect a slight rate hike, investors likely will remain cautious until the Fed makes its long-term intentions known.
"I think if (FOMC members) maintain the bias (toward higher interest rates), the market will continue to be jittery, expecting further tightening," said Joseph Lavorgna, senior economist at Deutsche Bank Securities. "Of course, the wording of the announcement will also be important."
Shortly before 1:30 p.m. ET, the Dow Jones industrial average reversed early losses to climb 60.78 points to 10,715.93. Volume remained light on the New York Stock Exchange at only 431 million shares traded, while advances outpaced declines 1,555 to 1,211.
The Nasdaq composite gained 13.57 points to 2,616.01 and the S&P 500 index rose 7.18 to 1,338.53. (Click here for a look at today's list of CNNfn's market movers.)
Bonds got their own quiet lift from the data, leaving the benchmark 30-year Treasury bond up 1/4 of a point in price to yield 6.07 percent, but many investors remained on the sidelines during the FOMC meeting.
The dollar eased again the euro and retreated more sharply from the yen as speculators continued to buy into Japan's apparent economic recovery.
Tech shares mixed
On Wall Street, rate-wary stocks once again followed the bond market upward, although some investors remained ready to lock in profits from Monday's rally.
In the interest rate-sensitive technology sector, which would suffer reduced growth prospects from higher rates, shares of industry bellwethers were mixed as investors wavered between lingering rate fears and encouraging corporate news.
Shares of beleaguered computer maker Compaq (CPQ) climbed 7/8 to 23-3/16 after it agreed to sell its Internet assets to Web venture capital firm CMGI (CMGI) for $2.3 billion. CMGI shares surged 13-3/4, or more than 14 percent, to 111-7/16, leading a general rally in the Internet sector.
However, among the other computer makers, Dell (DELL) eased 5/16 to 36-3/4 and Gateway (GTW) slipped 11/16 to 60-1/16. On the Dow, Hewlett Packard (HWP) lost 3/4 to 96-5/8.
IBM (IBM) shares climbed 1-13/16 to 124-3/8 after company officials refused to comment on speculation that the Dow computer heavyweight is negotiating to buy computer systems maker Sequent (SQNT). Still, the merger buzz was enough to push Sequent shares up 3-1/2, or 25 percent, to 17-1/2.
Elsewhere in the technology sector, Intel (INTC) nosed up 1-13/16 to 58-9/16 and Microsoft (MSFT) gained 1/4 to 87, but Cisco Systems (CSCO) lost 11/16 to 61-1/4.
Warnings, warnings
Despite the market's newfound optimism over rates, several companies heaped downward pressure on stocks by warning after the closing bell Monday that investors should expect profit shortfalls ahead.
Shares of Frontier (FRO) lost 11/16 to 57-5/8 after the telecommunications provider said upcoming profits will miss the mark. The company blamed long-distance pricing pressures for its forecast of second-quarter earnings of 20-22 cents per share, while analysts had been looking forward to 28 cents.
Disk drive maker Seagate (SEG) also warned that pricing pressures and disappointing sales had caused it to revise its earnings forecast for the fiscal fourth quarter down to 32-37 cents per share. Wall Street had expected a figure of 49 cents, pushing Seagate shares down 2-7/16 to 27-3/16 in frustration.
Not even the Dow blue chips were spared the urge to confess shortfalls ahead, as Philip Morris (MO) demonstrated by admitting 1999 profits will miss the mark by 2 cents per share. Shares of the tobacco and grocery-products conglomerate fell 1-1/16 to 39-15/16.
On the bright side, Newport News (NNS) shares climbed 3/16 to 30-7/16 after the shipwright firm said its second quarter will come in a few cents per share better than expected. 
|
|
|
|
|
 |
|
