Stocks End Quiet Session Mixed

Sat., June 26, 1999

Stock prices ended the quietest session of 1999 with mixed results Friday as optimism about second-quarter earnings gave way to concerns about interest rates.

The Dow Jones industrial average ended just 17.73 higher at 10,552.56, paring most of its 115-point gain earlier in the session. The blue-chip index shed 303 points, or 2.8 percent, during the week as investors worried about interest rates and corporate profits.

Broader market indicators also turned lower late in the day. The Standard & Poor’s 500 fell 0.47 to 1,315.31, and the Nasdaq composite index fell 1.34 to 2,552.65.

“This is a fairly frustrating market,” said Barry Hyman, senior equity analyst at Ehrenkrantz King Nussbaum in New York.

Prices initially rose Friday after the Commerce Department reported that the U.S. economy grew at a 4.3 percent annual rate in the first quarter, slightly better than the 4.1 percent estimated in May. The report of a stronger than expected economy could have stirred fears of inflation, but investors seemed to interpret the report as portending healthy second-quarter corporate earnings.

“We started out well based on the economic news, but there was simply no strong follow-through,” said Tony Cecin, director of institutional trading at Piper Jaffray in Minneapolis.

Technology stocks faltered after Merrill Lynch Internet analyst Henry Blodget issued a report saying America Online may not beat analysts’ earnings estimates by the huge margins it has in past quarters. AOL fell 3-15/16 to 102-13/16, pulling down most of the Internet sector.

Volume was paltry throughout the session. Traders said the sluggishness was typical of a summer Friday, but was especially low as investors awaited the meeting of the Federal Reserve’s Open Market Committee next Tuesday and Wednesday. The Federal Reserve is widely expected to raise rates next week in an effort to slow the economy and inflation.

Stocks got some support from a modest improvement in the bond market. The Treasury’s 30-year bond carried a yield of 6.15 percent, down from Thursday’s 6.16 percent.

While most sectors were mixed, some individual stocks flourished. Alcoa was the strongest component of the Dow, rising 2-1/4 to 62-5/8 after a Merrill Lynch analyst raised his price target on the stock, citing better-than-expected aluminum prices.

Certain high-tech stocks that had been depressed by the recent selloff recovered a bit. IBM rose 9/16 to 123-1/8. Lockheed Martin, which announced plans to sell $1 billion in assets, rose 11/16 to 35-7/8.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, with 1,491 up, 1,456 down and 592 unchanged.

The NYSE composite index fell 0.63 to 623.34, and the American Stock Exchange composite index rose 2.87 to 772.02. The Russell 2000 index of smaller companies fell 0.05 to 443.11.

Overseas, Japan’s Nikkei stock average fell 1.09 percent. European indexes were mixed, as Germany’s DAX index rose 0.2 percent, Britain’s FT-SE 100 gained 0.3 percent, and France’s CAC-40 closed down 0.4 percent.

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