FINANCIAL MARKETS : STOCKS : Traders Await Jobless Data; Dow Off 2.23
Blue chip stocks, after soaring more than 25 points, closed slightly lower Thursday as traders locked in profits before the release today of crucial employment numbers for March.
The Dow Jones industrial average eased 2.23 to 2,924.50. But advancing issues outnumbered declines by about 7 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 967 up, 683 down and 427 unchanged.
Big Board volume came to 198.12 million shares, down from 213.72 million Wednesday. Stocks had gained in early trading on speculation that a weak jobs report would encourage the Federal Reserve to cut interest rates.
But small stocks continued to steal the show as investors flocked to under-valued issues.
The NASDAQ over-the-counter index was at a record high of 497.57, a gain of 2.52. The old high was Wednesday’s 495.05.
The surge in the NASDAQ index indicates that investors are betting that small-company profits will grow more dramatically than those of large firms.
“There are better bargains in the second-tier group,” said Richard Meyer, managing director of institutional trading at Ladenburg Thalmann.
Supporting speculation that today’s unemployment figures will be higher was a Labor Department report that the number of Americans claiming jobless benefits in late March was the highest in more than eight years.
Although the odds of another cut in interest rates by the Federal Reserve grew with Thursday’s news of a jump in weekly jobless claims, analysts cautioned that an imminent reduction is not a sure bet. They said internal differences among Fed members and lingering wariness about inflation may convince the Fed to hold off on another rate cut.
Among market highlights:
* Cadence Design was the latest technology company to issue a disappointing earnings forecast. Its stock tumbled 5 3/8 to 26 1/2 after it said first-quarter profit was expected to be 20 to 23 cents a share--compared to a consensus analysts’ estimate of about 34 cents.
* In the over-the-counter market, Seagate Technology topped the actives list, rising 1 3/4 to 19 1/8 on more than 4.7 million shares. Soundview Financial raised earnings estimates and repeated a “buy” rating on the company.
* Price Co. surged 3 1/2 to 52 after the company reported second-quarter earnings that met analysts’ expectations.
* UAL jumped 2 1/8 to 149 1/4 on expectations that a newly reached pilots’ contract would pave the way for agreements on other labor contracts.
In foreign trading, German shares eased in what dealers saw as a healthy correction after sharp rises the previous three sessions. The 30-share DAX index was off 5.53 at 1,571.97.
Shares fell in Tokyo after Wednesday’s solid gains as investors awaited U.S. jobless figures for clues on the direction of interest rates. The key Nikkei 225-share average fell 90.25 to 26,689.81.
Share prices rose slightly on the London Stock Exchange. The broad-based Financial Times 100-share average was up 5.4 points to 2,524.25.
Credit
Bond prices surged in response to the bad news about U.S. unemployment claims, which suggested that the economy will need lower interest rates to recover from the recession.
The Treasury’s key 30-year bond advanced 21/32 point, or about $6.56 per $1,000 in face amount. Its yield decreased to 8.18% from 8.24% Wednesday.
Bond-trading strategists said the market was energized early in the day when the Labor Department released the weekly unemployment claims report.
That diluted hope for an early end to the recession following the U.S. triumph in the Persian Gulf War.
The bond market thrives on news of economic weakness because it implies lower inflation and a trend toward lower interest rates, both of which make fixed-income investments more valuable.
The federal funds rate, the interest on overnight loans between banks, traded at 5.75%, up from 5.50% late Wednesday.
Currency
The dollar declined broadly in domestic trading in anticipation of lower interest rates.
It closed at 1.6680 German marks in New York, down from 1.6750 at Wednesday’s close. It finished at 135.95 Japanese yen, down from 137.30.
The dollar put in a mixed performance overseas. But when trading shifted to the United States, it declined on the possibility that today’s unemployment report will show further economic problems.
“The dollar was knocked down as people began reassessing the likelihood that the Federal Reserve will ease credit--because of the weak (unemployment claims) data today, people are betting on a weak number tomorrow,” said Marc Chandler, an analyst with the firm IDEA.
In New York, the British pound cost $1.7845, more expensive than Wednesday’s $1.7735.
Other late dollar rates in New York, compared to late Wednesday’s rates, included: 1.4033 Swiss francs, down from 1.4205; 5.6495 French francs, down from 5.6795; 1,241.00 Italian lire, down from 1,247.00, and 1.1555 Canadian dollars, down from 1.1557.
Commodities
Hog and pork belly futures prices dropped on the Chicago Mercantile Exchange as frustrated traders abandoned hopes for higher cash hog prices and dropped out of the futures market.
On other commodity markets, cattle futures retreated, oil futures rose, grains and soybeans fell and precious metals fell.
Market Roundup, D6
