FINANCIAL MARKETS : Stocks Dip on Profit Taking, Russian Events

U.S. and European stocks ended broadly lower Tuesday as traders took profits and reacted to nationalist extremists’ victory in Russia’s elections.

Yields on long-term Treasury bonds rose amid new signs of economic strength.

Stocks

Smaller stocks led the U.S. market lower, as another downdraft hit telecommunications issues.

Meanwhile, the Dow industrials, which had surged to a record high Monday, couldn’t overcome the selling pressure Tuesday: The Dow slid 21.80 points to 3,742.63.

Analysts noted that the broad market was extremely weak, a trend that has been building over the past week. Losers topped winners by nearly 2 to 1 on both the New York Stock Exchange and the Nasdaq market.

Many experts say the market is a victim of year-end profit taking by investors who want to exit 1993 with at least some of the capital gains racked up earlier in the year.

Tuesday’s slide was also attributable in part to jitters over the rise of an extremist political party in Russia, which could spark a new crisis there.

Markets were broadly lower in Europe on Russian worries. In Paris, the CAC-40 stock index slid 39.81 points to 2,156.50. In Frankurt, the DAX index dropped 22.78 points to 2,149.97, while London’s FTSE-100 share index eased 6.2 to 3,248.4.

In the U.S. market, selling was concentrated in smaller stocks for a seventh straight session. The Nasdaq composite index dropped 8.25 points to 751.47, leaving it 4.6% below its 1993 high.

Among the market highlights:

Telecom issues, among the summer’s hottest stocks, led the Nasdaq market lower. DSC Communications sank 3 to 56 5/8, Qualcomm lost 1 1/8 to 53 1/2, Tellabs fell 3 to 41 1/2, Newbridge Networks dropped 2 1/4 to 52 3/4, Cencall Communications gave up 2 7/8 to 24 1/8 and America On-Line sank 3 1/2 to 57.

Among tech issues, Software Toolworks fell 1 1/4 to 8 1/2 after the entertainment software company apparently reiterated expectations for a slump in fiscal third-quarter sales in Europe.

Energy stocks were mostly lower on concerns that oil and gas prices could weaken further. Oryx lost 1 1/2 to 17, Offshore Logistics dove 1 3/8 to 12 1/8, Pennzoil fell 1 to 54 1/4 and Arco sank 1 1/8 to 103 1/8.

A few industrial stocks provided the only market bright spot. GE jumped 1 3/8 to 102 3/8, Snap-On Tools rose 5/8 to 37 7/8 and Dow Chemical added 5/8 to 59 5/8.

Medco Research surged 2 1/2 to 15 3/4. Its new Adenoscan drug has been approved for use in evaluating coronary artery disease.

Four of the most active stocks on the NYSE were Mexican companies, including two new issues. Grupo Televisa sold 15.45 million shares at 64 each, and they closed at 63 3/4. Also, construction firm Mexicano de Desarrollo sold 4.2 million units at 34. The units consisted of two shares each, both of which closed at 18 3/4.

In Mexico City, profit takers slammed the Bolsa index, which fell 45.02 points to 2,366.59.

In Tokyo, the Nikkei-225 index lost 18.60 points to 17,308.73.

Other Markets

Long-term Treasury bond yields jumped, influenced by news of economic strength.

In light trading, the yield on the Treasury’s 30-year bond climbed to 6.28% from 6.23% on Monday.

Behind the general market pessimism: The Commerce Department reported Tuesday that retail sales increased 0.4% in November, the eighth straight increase. In addition, auto makers reported that they sold cars at brisk annual rate of 7.1 million early this month.

Bond owners fear that a rising economy will hasten the day the Federal Reserve Board tightens credit to keep inflation at bay.

Elsewhere:

The dollar rose on safe-haven buying following the election success of Russian nationalists. The dollar rose to 1.715 German marks in New York from 1.707.

Gold bullion was unchanged at $388.60 an ounce for the most-active February futures on New York’s Comex. Silver slipped 4.1 cents to $5.09.

The slide in oil prices was halted for a day on news that Oman, a non-OPEC producer, would cut production and encourage other countries to help prop up prices. Light, sweet crude settled at $14.52 a barrel, unchanged from Monday, at the New York Merc.