Rally Fizzles Out; Dow Slips 0.19 on Slow Day
The stock market posted a small loss today, running into resistance after Thursday’s rally to new post-crash highs.
The Commerce Department reported this morning that the index of leading economic indicators fell 0.7% in March, following a 0.3% decline the month before.
The latest figure slightly exceeded the consensus estimate on Wall Street, and provided new evidence of the kind of slowing in business activity that many investors have been hoping for. Interest rates fell in the credit markets on the news.
Analysts said the response in the stock market was muted, however, by some misgivings about the potential implications of the figures for corporate earnings.
Brokers Leery
In addition, brokers said traders were leery of chasing after a rally that has proceeded for more than a month with few interruptions.
The Dow Jones average of 30 industrials slipped 0.19 to 2,418.80, finishing the week with a net gain of 9.34 points.
Advancing issues and declines ran about even on the New York Stock Exchange, with 735 up, 705 down and 494 unchanged.
Big Board volume totaled 158.39 million shares, against 191.17 million in the previous session.
The NYSE’s composite index edged up .07 to 173.13.
Bond prices were little changed amid profit-taking today despite further indications the economy is cooling and interest rates may ease. The credit market’s bellwether 30-year Treasury issue, which rose 1/2 point on Thursday, was up 3/32 point, or less than $1 for every $1,000 face amount at midday. Its yield was unchanged at 8.90%.
The Commerce Department said its chief economic forecasting gauge plunged 0.7% in March, the second straight decline and the biggest drop in eight months.
Analysts said the latest negative signals are in line with signs that the U.S. economy is losing steam. The prospect of slower growth “is appeasing the market for now,” said Mitchell Held, chief financial economist at Smith Barney, Harris, Upham & Co.
He noted there wasn’t more of a reaction to the latest numbers because “the market has had a steady diet of this over the past few days.”
Bond traders used the opportunity to take profits following a run-up in the previous session, analysts said. Lower oil, commodities and precious metals prices also helped support bonds.
Long-Term Bonds Gain
In the secondary market for Treasury securities, prices of short-term and intermediate governments were unchanged, and long-term maturities climbed as much as 3/16 point, according to Telerate Inc., a financial information service.
The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, slipped 0.14 to 1.134.66.
Corporate issues advanced. Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.47 to 304.55.
Yields on three-month Treasury bills rose to 8.67% as the discount rose 5 basis points to 8.41%. Yields on six-month bills rose to 8.98% as the discount rose 3 basis points to 8.49%. Yields on one-year bills rose to 9.10% as the discount gained 2 basis points to 8.43%.
A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, paid at maturity.
The federal funds rate, the interest on overnight loans between banks, traded at 9 13/16%, unchanged from late Thursday.
