Stocks Slip After Last Week’s Record Climb : Market Overview

Stocks edged lower Monday as investors sold shares that gained in price during last week’s strong rally. The Dow Jones industrial average fell 9.50 to 3,605.98.

* The Treasury market paused from its furious rally as most bond yields rose ahead of the government’s sale of two- and five-year notes.

* The dollar fell against the yen as Japan’s new prime minister failed to detail steps to slash the nation’s huge trade surplus or curb its strong currency.

Stocks

Analysts said the market was due for a rest after last week’s record-setting sessions, ignited by low interest rates. The Dow hit four straight all-time highs, and all major stock market barometers set records at least once.

“There was some profit taking among stocks that spurted last week,” said Michael Metz, an investment strategist with Oppenheimer & Co.

Medical stocks, an engine of last week’s rally, were among the weakest Monday as investors focused again on the implications of President Clinton’s upcoming health care reform.

Merck & Co. led the NYSE most-active list, falling 1/4 to 32 1/2, while Johnson & Johnson fell 5/8 to 40 3/8. United Health fell 2 5/8 to 57 1/2, Schering-Plough lost 1 1/4 to 61 1/2, Pfizer eased 1 3/8 to 62 3/4, Oxford Health shed 2 to 65, and U.S. Healthcare fell 1 3/4 to 44 3/4.

Among the other market highlights:

* IBM was one of a handful of strong blue-chips, adding 1 1/4 to 44 3/8. Industry sources said the computer maker is developing chips that duplicate the functions of Intel’s most powerful microprocessors. Traders also said they saw bottom-fishing in IBM shares.

* Silicon Graphics gained 1 to 39 1/2 after the company and Nintendo said they signed an agreement for a new-generation Nintendo machine.

* St. Joe Paper jumped 3 7/8 to 49 7/8. The company cited news about a lawsuit filed against it that some analysts believe could force St. Joe to sell some assets.

Overseas, London’s Financial Times 100 closed off 15.6 points, or 0.5%, at 3,042.0. Frankfurt’s 30-share DAX index closed down 34.41 points, or 1.8%, at 1,888.27. Tokyo’s Nikkei closed down 193.12 points, or 0.94%, at 20,414.14.

Mexico City stocks broke new ground after rosy economic expectations swept the Bolsa’s key index to a second consecutive closing high. The IPC index of 37 leading shares rose 23.19 points, or 1.21%, to close at a record 1,932.57.

Other Markets

The Treasury’s benchmark 30-year issue edged up to 6.22% from 6.21% on Friday.

Dealers were gearing up for the Treasury’s auction of $16 billion in two-year notes and $11 billion in five-year notes scheduled for today and Wednesday, respectively.

“Against the backdrop of no new significant news on the economy, we’re taking a little bit of a breather,” said Matthew Alexy, a market strategist at First Boston Corp.

The dollar fell below 103 yen in Tokyo in speculative selling after Japanese Prime Minister Morihiro Hosokawa failed to detail measures to trim the trade surplus in his first parliamentary speech.

“There can be no doubt that if the Japanese government does not actually deliver specific and substantial measures in the fairly near future, senior U.S. officials will resume their verbal offensive and drive the yen back to the 100 level,” said Tony Baron, chief economist at PaineWebber in London.

The dollar closed at 103.23 yen in New York, below 104.50 yen on Friday.

But while the dollar lost against the yen, it gained ground against the German mark on the expectation that the Bundesbank will cut interest rates Thursday. The dollar rose to 1.6855 marks in New York, up from 1.6755 marks at Friday’s close.

Gold prices fell 90 cents on New York’s Commodity Exchange, where bullion for the most-active December contract ended at $375.50 an ounce.

Market Roundup, D8