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Stocks languish, 'Nets roll
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November 10, 1998: 5:45 p.m. ET
Dow drifts for second day ahead of next week's Fed meeting; Internet stocks soar
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NEW YORK (CNNfn) - U.S blue chip stocks drifted lower for a second day Tuesday, as investors took another look at their portfolios and saw a need for more Internet issues.
Market participants appeared to hedge their bets ahead of next week's policy meeting of the Federal Reserve -- as speculation lingers about whether a cut in interest rates will be on the menu.
The Dow Jones industrial average shed 33.98 points to close at 8863.98. On the New York Stock Exchange, 1805 issues declined while 1231 advanced, as 673 million shares traded hands.
Meanwhile, powered by strength among Internet stocks, the Nasdaq Composite rose 4.57 to 1865.62. The broader S&P 500 index dipped 1.94 to 1128.26.
Market experts said investors were shaking up their portfolios by reaching for drug, Internet and consumer-products stocks, and moving out of cyclical and financial issues.
The airline sector extended its sharp losses into a second day. The Dow Transports index lost 44.85 points to 2864.79 and is down 3.5 percent already this week.
William Dudley, an economist at Goldman Sachs, said Wall Street's performance will be a key determinant of whether Federal Reserve officials will cut interest rates at their planned meeting next week. (146K WAV) or (146K AIFF)
A big new corporate bond issue from long-distance company Sprint drew investor attention away from U.S. Treasurys. The long bond still mustered a gain of 3/32 in price for a yield of 5.28 percent.
The dollar peeked past the 123 level against the Japanese yen for the first time in a month, as speculation swirled about the likelihood of a rate cut by the Fed and hopes grew about a bailout for jitters-strapped Brazil. The greenback finished the day off its highs against both the yen and the German mark.
Swoosh! Nothin' but Net
Internet stocks powered ahead as investors regained confidence in the volatile sector, which had seen some softness in recent weeks. At least nine sector leaders posted double-digit percentage gains.
Most overwhelming was the online music vendor K-Tel International (KTEL), which rock-and-rolled up 11-3/8, or 98 percent, to 22-15/16 after announcing a deal with Microsoft (MSFT) to market its wares through the software giant's MSN Shopping Channel.
Investors continued to bid shares of the Internet auctioneer eBay (EBAY) higher, charging ahead in part due to the bullish glare from Goldman Sachs, which forecast its share price will hit $150 within 12 months.
E-Bay was well on its way to reach this goal Tuesday, roaring up 27-7/8, or 27 percent, to 130-7/8.
Elsewhere, Dow component McDonald's (MCD) rose 4-1/8 to 71-3/16 after Merrill Lynch painted an upbeat picture for global sales at the fast-food giant, upping its new 12-month price target on McDonald's to $90 from $85.
In the high-tech sector, Dell Computer (DELL), which is expected to post earnings after the bell Thursday, closed up 1-5/16 at a new 52-week high of 70-5/16. Among other bellwethers, Intel (INTC) rose 1-9/16 to 97-9/16 and Microsoft climbed 1-3/8 to 112-1/16. Dow member IBM (IBM) gained 4-5/8 to 156.
Airline stocks came under pressure for a second straight day, after Goldman Sachs cut its outlook on the sector, which had benefited from a strong run in recent weeks.
Among the losers were AMR (AMR), the parent of American Airlines, off 1-3/8 to 61-1/8, Delta Air Lines (DAL), down 3-9/16 to 100-9/16, and U.S. Airways (U), shedding 2-5/16 to 48-1/4.
Wall Street's big financial players also softened Tuesday: J.P. Morgan (JPM) fell 2-1/8 to 97-5/8, American Express (AXP) lost 2-1/8 to 92-3/4 and Citigroup (CCI) slipped 1-3/8 to 43-1/2. All three stocks are members of the Dow 30.
(Click here for a look at today's CNNfn market movers)
(Click here for a look at today's tech stock report)
-- by staff writer Jamey Keaten
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