Stocks close mixed Dow gains 1.95

August 10, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks closed mixed yesterday as Exxon Corp. slumped and a host of chemical and technology stocks gained.

Stocks were also pulled down by a drop in Treasury bonds after the first leg of the government's sale of $40 billion of new debt and by expectations that next week's Federal Reserve policy meeting will lead to still higher interest rates.

"The focus is still the same: whether or not the Fed will raise rates," said Joseph DeMarco, managing director for equity trading at HSBC Asset Management, a unit of Hong Kong & Shanghai Bank. Technology stocks appear "to be the only strong area in the market," amid speculation that many stocks are undervalued in the industry, he said.

The Dow Jones industrial average, which gained 6.79 Monday, added 1.95, to 3,755.76, as gains in Union Carbide Corp., IBM and Caterpillar Inc. offset losses in Exxon, DuPont Co. and J.P. Morgan & Co.

The Standard & Poor's 500 Index was little changed, adding 0.03, to 457.92, after falling as much as 1.23. Rising computer, health care, semiconductor, regional bank and drug stocks helped the index.

The Nasdaq composite index rose 2.14, to 722.61, fueled by gains in Intel Corp., Microsoft Corp., Oracle Systems Corp., Sybase Inc. and Cisco Systems Inc.

Almost four stocks fell for every three that rose on the New York Stock Exchange, where volume grew to about 260 million shares from 217.7 million Monday.

Technology stocks were among the few pockets of strength. Jeffrey Vinik, manager of Fidelity Investments' $35 billion Magellan Fund, said in the Wall Street Journal that many of the stocks in the group are undervalued.

International Business Machines Corp. rallied $1.25, to $64.50, amid expectations of stronger sales of personal computers. The company said it plans to release the latest version of its OS/2 operating system in October.

Shares of Advanced Micro rose 50 cents, to $27.625; Intel gained $1.25, to $59.25; Motorola added 12.5 cents, to $53.50; National Semiconductor rose 12.5 cents, to $17.50; and Texas Instruments climbed 75 cents, to $80.25.

Exxon shares dropped $1.25, to $68.625, after the company's largest petrochemical plant in the United States was rocked by a series of explosions and a fire. The extent of the damage has yet to be determined, but speculation focused on the likelihood of reduced ethylene production.

Meanwhile, bonds fell in price, pushing up yields, as the government sold $17 billion of three-year notes. Yields on the benchmark 30-year U.S. Treasury bond widened to 7.57 percent from 7.54 percent Monday.

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