Inflation, Interest Rate Jitters Push Dow Lower
January’s stunning stock-market advance continued to erode Monday as bond-market interest rates shot to a four-month high in nervous trading before Tuesday’s release of a pivotal report on inflation.
The Dow Jones industrial average fell 35.79 to 6,660.69 for its fourth straight losing session. The Dow has lost about 223 points over that span, halving the year’s impressive gains to 3.3 percent.
Broader stock measures pulled back again too, with the bond market’s increasingly bleak interest-rate backdrop prompting money managers to protect more of this month’s profits on stocks.
Disappointment over last week’s earnings report from IBM continued to weigh heavily on the computer maker’s shares and the Dow. But leading computer-industry names continued to hold up fairly well against the tide of profit-taking.
“You still can’t get enough Microsoft and Intel. The stocks that did not disappoint in earnings continue to outperform the market through this consolidation period,” said Scott Bleier, chief of Prime Charter. “The names that came in with better-than-expected numbers continue to see a significant deployment of funds.”
Some of the stocks that moved substantially or traded heavily Monday:
NYSE
Measurex, up 10-1/4 at 34-1/2.
Honeywell plans to acquire the provider of computer-based manufacturing control systems for $35 a share, or about about $600 million.
Revco DS, down 3/8 at 38-7/8.
CVS, down 1/8 at 42-7/8.
The companies confirmed a report in The Wall Street Journal that they are discussing a possible merger, but gave no assurances a deal would take place. A merger would create the nation’s No. 2 drugstore chain. Antitrust officials blocked Revco’s $1.8 billion sale to Rite-Aid last year.
General Motors, down 5/8 at 61-7/8.
The automaker raised its quarterly dividend to 50 cents from 40 cents and approved a $2.5 billion share buyback. The stock had advanced Friday amid speculation GM would make such moves. In Ohio, meanwhile, about 4,300 workers at a GM plant that assembles sport utility vehicles remained on strike after refusing to accept a three-year contract proposal.
NASDAQ
Trimedyne, up 2-9/32 at 5-1/2.
The FDA gave approved the company’s laser for cosmetic surgery and therapeutic use in plastic and dermatological surgery.
Software Spectrum, down 10-1/2 at 23.
The business-software distributor expects earnings for its third-quarter ended Dec. 31 to be well below analyst estimates. Dallas-based Software Spectrum said late Friday it was hurt by an operating loss in the Asia-Pacific market, lower profit margins, and costs related to an acquisition completed earlier in the year.