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Wall St. retreats
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November 23, 1999: 5:22 p.m. ET
Profit taking emerges following recent gains; tech shares lead the way down
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - U.S. stocks suffered a pullback Tuesday as inflation concerns triggered profit taking following recent hefty gains. Technology shares, firm in recent sessions, gave back ground.
The Dow Jones industrial average fell 93.89 points to 10,995.63. On the New York Stock Exchange, declines widely outnumbered advances 2,201 to 895 as trading volume reached an active 910 million shares.
The Nasdaq composite lost 49.69 points, or 1.5 percent, to 3,342.87, and the S&P 500 index slipped 16.28 points, or 1.2 percent, to 1,404.66.
Treasury prices finished the day little changed, with the benchmark 30-year bond flat in price, its yield unchanged from 6.19 percent late Monday.
The dollar fell slightly against the yen and rose against the euro.
Soaring oil prices fuel inflation woes
Following strength in previous sessions, investors took some money off the table as Wall Street prepared to head home early for the Thanksgiving holiday. Brian Conroy, head of listed trading at J.P. Morgan, said Tuesday's losses were a "defensive play."
"The market has had a tremendous move. It is digesting the recent gains," he said.
Investors also showed concern about oil prices, which surged Monday to their highest level since January 1991. In New York, January crude oil futures traded settled at $26.44 Tuesday, off the nine-year high posted Monday.
Substantial price gains may lead to faster inflation and therefore could prompt the Federal Reserve to hike interest rates again in the foreseeable future. Last Tuesday, the central bank increased its key interest rate by a quarter percentage point.
Despite the increase in crude prices, oil industry leaders extended Monday's losses. Among the day's newsmakers, Exxon (XON) slipped 1-15/32 to 78-1/16 and Mobil (MOB) dipped 1-7/8 to 102 after the Wall Street Journal reported the companies may divest approximately 15 percent of their gasoline station networks in order to gain approval for their planned $81.02 billion merger.
Robert Morris, director of equity investments at Lord Abbett, a New York fund management group, forecasts more interest rate hikes in the first half of next year. He noted the complacency last week among many investors that the Fed will not raise rates, but reality was now sinking in.
"The economy is showing more signs of strength than the Fed is comfortable with. Unless the economy shows signs of slowing, the Fed will come into play in the first half of next year," he said.
Nasdaq slumps
Across-the-board losses to technology shares led the downward movement with the Nasdaq reversing Monday's gains.
Among the exchange's tech bellwethers, Oracle (ORCL) fell 3-15/16 to 73-1/2 and Intel (INTC) eased 1-1/2 to 79.
In wobbly trade, America Online (AOL) finished up 1-15/16 at 83-5/8. A 2-for-1 stock split by the world's largest online service provider became effective late Monday.
In addition, America Online announced a five-year alliance with Intuit (INTU), the No. 1 maker of personal finance software, to offer a new Internet service to pay household bills.
After the market close, Intuit reported a fiscal first-quarter pro-forma loss of $22.6 million, or 12 cents a share. Earnings tracker First Call forecast a loss of 19 cents a share. The stock advanced 2-3/16 to 44-1/16 during regular trade and was at 44-1/2 in after-hours trade, according to Instinet.
In other earnings news, network software maker Novell (NOVL) reported a fiscal fourth-quarter profit late Tuesday of $73.8 million, or 21 cents per share on a diluted basis. The stock receded 1-11/16 to 22 during regular trading hours and was at 21-1/2 in after-hours trade, according to Instinet.
The latest economic news did little to stir investor interest. U.S. durable goods orders, which measures orders for big-ticket items, fell 1.3 percent in October after a downwardly revised 1.9 percent drop in September, the Commerce Department said.
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