STOCKS : Profit Taking Pushes Dow Below 3,000 Mark
Blue chip stocks lost ground for the third straight day Thursday, with the Dow industrial index dipping below the 3,000 mark just one week after breaking that barrier to reach all-time highs.
Profit takers eager to lock in recent gains hurt stocks, as did a further rise in interest rates.
The Dow Jones industrial average fell 10.51 points to 2,994.86, extending its loss over the past three sessions to 40.47 points.
In the broader market, 870 stocks fell, 673 rose and 508 were unchanged in nationwide trading of New York Stock Exchange-listed stocks.
Big Board slowed to 168.26 million shares from Wednesday’s 186.56 million.
Besides taking profits, investors were preparing themselves for today’s release of jobs data for May.
Bond yields rose Thursday, extending a recent advance that has accompanied signs of a budding economic recovery. If today’s jobs report shows a distinct turn in the economy, interest rates could soar--hurting stocks again.
Among the market highlights:
* Gold-mining stocks rocketed on expectations of a strong economic recovery that could boost demand for metals--and inflation. The stocks also were sparked by a huge jump in the price of silver. ASA rose 2 3/4 to 50 1/2, Freeport-McMoran Gold gained 2 5/8 to 26 7/8, Newmont Gold jumped 2 1/2 to 39 1/4 and Coeur D’Alene rose 2 1/4 to 22 1/4.
* The Dow index was pulled lower by Alcoa, off 1 5/8 to 69 7/8; Disney, down 2 3/4 to 115, and United Technologies, off 1 3/4 to 45 1/4.
* Bank stocks slipped, after recent gains. Wells Fargo dropped 1 3/8 to 96 3/8, First Interstate fell 1/2 to 41 3/8 and Chase lost 1/2 to 20 3/4.
* Biotech stocks also weakened. Amgen dropped 4 3/4 to 117, Genzyme lost 3 to 33 3/4 and Centocor gave up 1 1/2 to 32 1/4.
* In the media sector, Time Warner plunged 11 1/4 to 99 1/2 after it announced a stock-sale plan that disappointed investors. Meanwhile, Paramount rocketed 4 1/4 to 45 on speculation that Kohlberg, Kravis & Roberts and entertainment investor David Geffen were teaming up to bid for the company. Geffen denied the rumors.
* Among airlines, Delta fell 1 3/8 to 73 1/8 after analysts at three Wall Street houses lowered earnings estimates. But Southwest rose 1 to 27 after competitor America West said it suspended aircraft payments.
* Dreyer’s Grand Ice Cream leaped 2 1/4 to 28 3/4 after Morgan Stanley initiated coverage with a buy recommendation.
* Circuit City fell 1 5/8 to 19 after the retailer said same-store sales in May fell 8%. Penney also dropped, off 1 7/8 to 53 3/4 on its sales report. But Nordstrom soared 1 5/8 to 47 1/4.
* Among Southland issues, Benton Oil slumped 1 to 9 1/2. A Thursday story in The Times noted the controversy over the company’s finances and its long-term prospects. At the firm’s annual meeting Thursday, Benton said all proxy proposals were passed, including authorization to expand the number of shares outstanding to 40 million from 10 million.
* McDonnell Douglas fell 1 5/8 to 53 1/2. A Shearson analyst lowered his rating because of the recent price run-up, though the analyst still called the stock a buy.
In foreign trading, London’s Financial Times 100-share average ended up 3.8 points at 2,525.3.
In Frankfurt, the 30-share DAX lost 8.59 points to 1,704.17.
In Tokyo, the Nikkei average closed 305.45 points lower at 24,984.12.
In Mexico City, the Bolsa index rose again, gaining 3.34 points to a new record 1,131.77.
Credit
A strong May sales gain at some retailers and a drop in unemployment claims sent interest rates up, as investors braced for today’s May employment report.
The Treasury’s 30-year bond lost 5/16 point, or $3.13 per $1,000. Its yield rose to 8.42% from 8.39% late Wednesday.
The Labor Department reported that initial claims for state unemployment insurance slid 6,000 to 439,000 for the week ended May 25. And several major retailers reported strong sales in May, an indication that consumers are resuming normal buying habits.
Both reports supported recent data that points to improvement in the economy, which could mean further pressure on interest rates as more individuals and companies seek to borrow.
The federal funds rate, the interest on overnight loans between banks, was quoted at 5.67%, unchanged from late Wednesday.
Currency
The dollar settled mostly higher in quiet trading, boosted by hopes for a stronger U.S. economy.
The dollar held to a relatively narrow trading range throughout the session. But Marc Chandler, an analyst with the financial advisory firm IDEA, noted that the U.S. currency hit a high for the year against the Swiss franc--a move some traders view as a precursor to a similar advance against the German mark in the coming days.
The dollar closed in New York at 1.753 German marks, up from 1.749 at Wednesday’s close. It also finished at 139.28 Japanese yen, down from 139.30 Wednesday.
Commodities
Silver soared to an eight-month high amid speculative buying powered in part by an industry report that demand for the metal is outstripping production.
On other commodity markets, gold futures also rose; oil futures were mixed; grains and soybeans were mixed, and livestock and meat futures were mixed.
Silver futures settled 24.7 to 26.9 cents higher on New York’s Commodity Exchange, with the contract for delivery in June at $4.41 an ounce, the highest daily settlement for a near-term silver contract since Oct. 9.
Gold futures finished $2.50 to $3 higher, with June at $365.10.
Silver’s surge followed a leap of more than 12 cents May 28. Some analysts said the moves confirmed the market’s recovery from the 17-year low of $3.50 reached in February.
Elsewhere, oil prices fell on the New York Mercantile Exchange, with light, sweet crude oil falling 4 to 16 cents, with July at $20.33 a barrel.
Market Roundup, D6
