Greenspan Comments Fail To Calm Markets
Stocks slid with bonds for the fourth straight session Tuesday. Investors sold shares to lock in profits from a faltering rally as Federal Reserve Chairman Alan Greenspan issued a typically cautious assessment of the economy that failed to renew confidence.
The Dow Jones industrial average, which cracked the 5,600-mark for the first time just last week, fell 44.79 points to 5,458.53. Twice during the day, the average fell more than 50 points, tripping New York Stock Exchange circuit breakers on computer-driven trading.
Bond prices were lower most of the day before plunging at midafternoon, dragging stocks lower, as Greenspan delivered his semiannual report to Congress. Greenspan said the nation’s economy is “basically on track for sustained growth.”
He also did not rule out further interest rate cuts to ensure continued growth, but his comments apparently weren’t soothing enough to calm jitters about interest rates.
Declining issues outnumbered advancers by nearly 4 to 1 on the New York Stock Exchange, where volume totaled 395.02 million shares as of 4 p.m., down from 432.38 million on Friday. Markets were closed Monday in observance of Presidents Day.
Some of the stocks that moved substantially or traded heavily Tuesday:
NYSE
H&R Block, up 2 to 41-7/8.
The tax preparation company announced plans to spin off CompuServe, a subsidiary that is the nation’s second-largest online service. H&R Block also reported a loss of $5.5 million, or 5 cents per share, for the quarter that ended Jan. 31, due to heavy spending at CompuServe in new marketing programs and expansion. A year ago, H&R Block earned $8.1 million in the same quarter.
CUC International, down 6-1/4 to 31-1/4.
The membership-based home shopping service said it is buying two software makers in deals worth a combined $2.2 billion. CUC said it would pay about $1.14 billion for Davidson & Associates, a publisher of educational software. CUC also said it would buy PC game maker Sierra On-Line for about $1.06 billion.
NASDAQ
Davidson & Associates, up 6 to 24-1/2.
Sierra On-Line, up 7-3/8 to 34-1/2.
Stock prices for the two software makers surged after CUC International announced its plan to acquire them for a combined $2.2 billion.
Microsoft, down 1/8 to 97-3/4.
Positioning itself to be a major player on the Internet, the software giant announced a reorganization that would create a new interactive media division. The changes are aimed at putting Microsoft in a position to dominate the next wave of the computer business that will be based on interactive technologies. Microsoft is perceived to be a distant second in that market to Netscape.