FINANCIAL MARKETS : Stocks Dip on Profit Taking, Russian Events

The stock market ended broadly lower Tuesday as traders took profits and reacted to rising interest rates and concern about political events in Russia.

Yields on long-term Treasury bonds rose sharply amid news of economic strength, rising commodity prices and bearish technical factors.

Stocks

Jittery investors were looking for excuses to sell stocks that have run up in recent sessions, analysts said. While blue-chip stocks have set four new highs over the past week, the broader market has not kept up.

“There is widespread nervousness provoked by the high levels of the stock market,” said James Melcher, founder and president of Balestra Capital.

The Dow Jones industrial average fell 21.80 points to 3,742.63, while the Nasdaq composite index lost 8.25 to 751.47.

Bond prices lost ground again, pushing up market interest rates. Higher rates increase the cost of money and make shares relatively less attractive.

Another negative for stocks was the political turmoil in Russia, where the extreme nationalist Liberal Democratic Party appears to have an unbeatable lead over President Boris Yeltsin’s backers in that country’s parliamentary vote. There is concern the events may threaten the recent reforms in Russia.

Among the market highlights:

Economically sensitive stocks that have led the Dow’s advances in recent sessions fared the worst. Chrysler lost 1 1/2 to 55 1/8, Minnesota Mining & Manufacturing fell 1/2 to 110 3/8 and Aluminum Co. of America fell 1 1/4 to 72 3/8.

Simon Property Group closed at 22 1/2. The initial public offering of 37.75 million common shares of the real estate investment trust was priced at $22.25 each.

IBM, which helped lead the Dow to its record high on Monday after saying it will sell its Federal Systems Co. to Loral Corp. for $1.58 billion in cash, fell 1 1/4 to 56 1/8.

Software Toolworks fell 1 1/4 to 8 1/2 as the company apparently reiterated expectations for a slump in fiscal third-quarter sales in Europe over the same period last year.

Medco Research gained 2 1/2 to 15 3/4 after the company said it was notified by the Food and Drug Administration that its new drug application for Adenosine infusion was given approvable status.

Stocks ended lower abroad. In Tokyo, the Nikkei-225 index lost 18.60 points, or 0.1%, at 17,308.73. In London, the Financial Times 100-share index fell 6.2 points, or 0.2%, at 3,248.4. Stocks lost 1.0% in Frankfurt and 1.8% in Paris. In Mexico City, investors took profits on recent gains to record levels, with the 36-share IPC index ending down 45.02 points, or 1.87%, at 2,366.59.

Other Markets

In light trading, the yield of the Treasury’s main 30-year bond jumped to 6.28% from 6.23% on Monday. Its price, which moves in the opposite direction, sunk 3/4 point, or $7.50 per $1,000 in face value.

Behind the general market pessimism is a spurt in economic growth this quarter and speculation by some traders and investors that the recovery will continue to strengthen early next year.

That has aroused concerns that the Federal Reserve Board will nudge interest rates higher in the first quarter to curb inflation pressures, which can be aggravated by economic growth.

The dollar rose against most leading currencies on safe-haven buying following the election success of far-right Russian nationalist Vladimir Zhirinovsky. The dollar rose to 1.7145 marks in late New York trading from 1.7070 German marks late Monday.

Gold bullion was unchanged at $388.60 an ounce for the most-active February contract on New York’s Commodity Exchange.

The slide in oil prices was halted for a day and refined products rose slightly on news that Oman, a leading non-OPEC producer, would cut production and encourage other countries to help prop up prices.

After a day of volatile trading, light, sweet crude oil for delivery next month settled at $14.52 per barrel, unchanged from Monday, at the New York Mercantile Exchange. Prices had fallen as low as $14.22 and reached as high as $14.87 during the session.