Dow index slips a 2nd day, 1.68 points, after 1994's fast start

January 13, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks closed mixed yesterday, stumbling for a second day, after the market had kicked off the new year by setting a string of records.

"The market was up for four straight days, and now we're slipping a little," said John Blair, head trader at NatWest Securities Corp. "It's nothing to be concerned about."

"We're not selling stocks," said Bill Miller, a managing director at Renaissance Investment Management Inc. "In fact, we remain fully invested in the stock market."

The Dow Jones industrial average fell 1.68 points, to 3,848.63, after declining 15.20 Tuesday. The market benchmark closed Monday at a record 3,865.51.

The Standard & Poor's 500 Index rose 0.04, to 474.17, and closed below Monday's record 475.37. The Nasdaq Combined Composite Index climbed 1.35, to 786.87, and the American Stock Exchange Market Value Index gained 0.5, to 479.87.

The Dow Jones transportation average rose 9.22, to a record 1,821.51.

The market received a boost from optimism about falling interest rates and a rally in shares of semiconductor makers.

Long-term rates plunged after the Labor Department said producer prices fell 0.1 percent in December. The yield on the 30-year Treasury bond fell to 6.17 percent, from 6.24 percent, the lowest in five weeks.

Subdued inflation typically boosts stocks because it suggests interest rates will stay low. Low rates tend to make stocks a better investment than fixed-income securities.

"The lower rates go, the more bullish we are on stocks," said Mr. Miller, who helps oversee about $1.5 billion for Renaissance.

Semiconductor stocks rallied on an industry report that said demand for computer chips exceeded analyst expectations in December.

"This is an indication of strength in the personal computer market and an improving U.S. economy," said Krishna Shankar, a semiconductor analyst at Salomon Bros. Inc.

Intel Corp., the nation's leading independent maker of semiconductors, rose $1.625, to $68.375. Advanced Micro Devices Inc. climbed 12.5 cents, to $17.875; Motorola Inc. gained $2.875, to $95.125; and Texas Instruments Inc. increased $3.25, to $70.25.

On the New York Stock Exchange, nine common stocks advanced for every eight that declined. Trading was active, with 310.7 million shares changing hands on the Big Board.

Intel, MCI Communications Corp., Telefonos de Mexico SA, Novell Inc. and Oracle Corp. were the five most actively traded issues on the U.S. Composite.

Novell rose $1, to $23, after an analyst at SoundView Financial Group said the computer networking company is succeeding in its efforts to reduce inventory.

Merry-Go-Round Enterprises Inc. fell 87.5 cents, to $1.75. The nation's largest retailer of trendy young-people's clothing filed for Chapter 11 bankruptcy protection Tuesday after it was unable to get credit to buy merchandise.

Summit Technology Inc. rallied $3, to $26. The maker of laser medical devices received clearance from the Food and Drug Administration to expand human tests of treatments for use after laser eye surgery. The tests are being conducted jointly with Allergan Inc.

Alcatel Alsthom's American depositary receipts, which each represent one-fifth of an ordinary share, dropped $2.875, to $26.25. The French telecommunications company said it expects 1994 net income to fall below its 1993 profit.

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