U.S. stocks closed lower for the first time in nine sessions Monday on profit-taking following last week's gains.
The Dow Jones industrial average declined 77.50 points, or 0.9 percent, to 8,897.96, after running up 6.3 percent over the last eight trading days.Last week, the Dow added 383.36 points, or 4.5 percent. It was the barometer's second-best weekly showing since June 1997. The advance came as investors factored further Federal Reserve interest-rate cuts into prices.
Monday's downdraft did little to dent the spirits of some market watchers.
"I would anticipate the market's action to be very similar to what we saw a couple of weeks ago," said Gregory Nie, senior vice president of technical research at Everen Securities. "Then, we paused, took a timeout, and did a little backing and filling before we gathered steam and came through Dow 8600.
"I would look for the market to find support at Dow 8600 or better," said Nie. "It would just be another period where we rest up a little before we make another run at the 8900-to-9200 level. If we do fade, I think it will be a buying opportunity."
"The best indication of the current strength of the market is its inability to [pull back] even a token amount," said Robert Dickey, managing director of technical research at Dain Rauscher Wessels, in a research report. "Whether it should or could is not the issue, but the fact that it won't is most bullish.
"The biggest risk that we see for investors now is not being in the market between now and year-end. Those who are waiting for a signal or another dip may end up missing the move altogether."
There was little of fundamental import on the day's agenda. Most U.S. corporations have already unveiled third-quarter earnings reports, so investors' focus has shifted to the outlook for 1999 U.S. economic growth and further Fed interest rate cuts. Most on Wall Street expect at least one more Fed rate trim by year-end.
"Investors are more accepting of the idea that perhaps there is no real broad dwnturn in economic activity that's pending," said A.C. Moore, chief investment strategist at Dunvegan Securities. "When they do that, they ignore at their peril the message from the Federal Reserve. The Fed is looking into that economic glass and it feels that economic conditions are trending downward.
"When economic conditions begin to move in a certain way, the trend tends to stay that way," he said. "We've seen a couple of good economic reports, but the overall trend is one of slackening worldwide activity and recession. Those difficulties continue to make their way to our shores through international companies.
"So, I think it's premature to suggest that the market is out of the woods," Moore concluded.
In Monday's market indicators:
- The Standard & Poor's 500 Index fell 0.9 percent.
- New York Stock Exchange losers bettered winners by 19 to 11. Fifty-three stocks printed new 52-week highs, while 25 stocks scraped to new 52-week lows.
- On the Big Board floor, turnover eased 13 percent to 594 million shares.
- The Nasdaq Composite advanced 0.2 percent. Declining issues led advancers by 22 to 17 in the Nasdaq Stock Market, with 73 new highs and 37 new lows. Volume totaled 840 million shares.
- The Russell 2000 Index of small-company stocks sank 0.5 percent.
- The 30-year Treasury rose 1 17/32, to yield 5.283 percent.
Among the companies in the news:
- May Dept. Stores (MAY) dipped 1 1/8 to 59 1/16. It reported third-quarter net of 52 cents a share, 4 cents above the year-earlier figure. That was in line with the expectations of most Wall Street analysts.
- Comcast (CMCSA) rose 1 1/2 to 46 1/4. The nation's fourth-largest cable operator checked in with a third-quarter loss of a cent a share vs. the 18-cent-a-share deficit it logged in the same quarter of 1997. But the figure was far better than the shortfall of 25 cents that Wall Street had forecast.
- AMR (AMR) declined 4 1/4 to 62 1/2. Goldman Sachs cut shares of the parent of American Airlines to "market perform" from "trading buy." The broker expects 1999 pretax profits of primary U.S. airlines to suffer due to slackening demand and increased capacity.
- America West Holdings (AWA) lost 1 7/8 to 14 7/16 and US Airways Group (U) sank 2 3/8 to 50 5/8. Goldman lowered its opinion of the stocks to "market perform" from "market outperform."
- JP Morgan (JPM) sagged 4 to 99 3/4. It will lay off 750 workers, or about 5 percent of its total.
- Computer software and consulting interest Seec (SEEC) vaulted 3 1/16, or 52 percent, to 8 15/16 on favorable comments in Barron's over the weekend.
- Netscape Communications (NSCP) rose 3 3/4 to 29 1/8, I2 Technologies (ITWO) escalated 4 11/16 to 26, and PMC-Sierra (PMCS) added 3 1/8 to 50 15/16. Roger McNamee, general partner and co-founder of Integral Capital Partners, had kind words for th companies in a Barron's interview.
- Alcan Aluminum (AL) added 7/8 to 28 3/16. It inked a 10-year aluminum supply agreement with General Motors (GM) for the use of aluminum in automobile components and structures, including the development of more fuel-efficient vehicles. The multibillion dollar agreement ensures the supply of metal from Alcan at competitive cost to meet General Motors' projected needs into the next decade.
- Broadcom (BRCM) climbed 6 to 92 1/2. It released a new chip that enables a viewer to watch television programs and Internet pages at the same time.
- Geron (GERN) slipped 3 7/16 to 13 3/4 following Friday's 2 5/16-point rise. Friday, the biotechnology interest announced it had discovered a means of reproducing human stem cells for use in transplantation and human tissue production.
- Centocor (CNTO) appreciated 4 3/8 to 51 5/8 after a study showed that its anticlotting drug ReoPro, when used in conjunction with stents, reduces the risk of death in heart disease patients by 57 percent.
- Excite (XCIT) rose 7 1/2 to 47 1/2. It unveiled a virtual credit card wallet, which it hopes will speed up online shopping and alleviate security concerns regarding credit card use online.
- Other Web stocks rose higher despite the weakness in the broad market. Yahoo! advanced 11 3/16 to 164 3/4, eBay 19 to 103, MindSpring Enterprises 7 3/16 to 52 13/16, Infoseek 4 9/16 to 38 9/16, CNET 3 5/8 to 44 5/16, GeoCities 3 23/32 to 37 120/256, and America Online 4 7/16 to 144 7/16.
- Most benchmark computer names also posted gains, with winners outnumbering losers by 3 to 2. International Business Machines advanced 1 11/16 to 151 5/8, Dell Computer 3 5/16 to 69, Microsoft 1 3/8 to 110 11/16, and Computer Associates 1 7/8 to 44 3/16. On the downside, Lucent Technologies shed 1 3/4 to 88 3/8 and Motorola 1 1/4 to 53 1/4.