Dow Drops as Investors Await Jobless Report : Market Overview
* Computer-driven selling sent stocks lower, with many investors staying on the sidelines ahead of today’s anxiously awaited March employment report. The Dow Jones industrial average fell 15.21 points to 3,234.12.
* Smaller stocks suffered deeper losses, as biotech shares plunged anew, led by Immunex.
* Interest rates were mostly unchanged, awaiting the employment data today.
Stocks
Throughout much of the session the Dow was up while the broader market lost ground, a pattern that has become familiar this week.
Analysts say that trend is dangerous because it allows the Dow to mask increasing weakness among the majority of stocks.
On the New York Stock Exchange, declining issues outnumbered advancers by about 11 to 6, a worrisome margin.
Big Board volume came to 185.39 million shares against 186.42 million on Wednesday.
Among smaller stocks, the NASDAQ composite index tumbled 8.27 points, or 1.4%, to 593.82, hurt by another major selloff in biotech.
Analysts said investors in general remain suspicious about the strength of the nation’s economic recovery. Thus, today’s March employment report will be an important indicator of the recovery’s progress. Stock traders want the recovery to be on track, but not strong enough to boost interest rates further.
Some analysts said a survey of corporate purchasing managers released Wednesday suggests that the employment report will be weaker than had been expected.
“Concern is that the economy is sputtering and we will not get strong enough earnings to validate current prices,” said Hugh Johnson, analyst at First Albany.
Meanwhile, though U.S. stocks haven’t shown much reaction to the Tokyo market’s meltdown, concern is growing and may be causing some investors to step away from U.S. stocks.
“There is a deepening concern in world financial markets that there is a financial crisis brewing in Japan,” Johnson said.
Among the market highlights:
* In the biotech group, Immunex plummeted 10 1/2 to 31 1/2 after the company said first-quarter sales of its drug Leukine were below expectations because of a giveaway program by Hoechst, its partner in developing the drug. Immunex is suing Hoechst.
The news spurred a broad selloff in biotech, a group that had already fallen sharply in the first quarter after rocketing last year. Amgen tumbled 2 3/4 to 59 1/2, Gensia sank 3 3/8 to 34 1/4, Alza gave up 2 to 40 5/8, and Immune Response lost 2 1/4 to 24.
* The biotech plunge caused health care stocks in general to fall. Lilly lost 1 7/8 to 70 5/8, Tokos Medical fell 1 to 28 1/4, and National Medical Enterprises fell 3/8 to 12 3/4.
* Brokerage stocks were among the day’s biggest losers outside biotech, as some investors began to fear that the bull market will stall. Merrill Lynch plunged 3 3/8 to 52 1/2, PaineWebber sank 3 3/8 to 20, Schwab lost 3 1/8 to 29 1/8, and Morgan Stanley fell 2 5/8 to 51 1/2.
* Energy-related stocks also were weak. CMS Energy topped the Big Board active list, dropping 6 to 15 3/4 after Michigan regulators denied the utility’s proposals to settle a rate dispute.
Elsewhere, natural-gas pipeline firm Transco Energy lost 2 1/4 to 9 7/8 after saying it could face a liquidity problem by late summer unless it completes a restructuring plan.
* Among retailers, Price Co. plunged 10 3/4 to 35 after the warehouse retailer posted shockingly low earnings. The news hurt other deep-discounters: Costco slid 2 1/4 to 35 1/2, Fifty-Off dropped 2 3/8 to 19 3/4, and Staples gave up 2 3/8 to 28 5/8.
* The market’s few bright spots included Disney, up 2 3/8 to 156 1/2 after trading at a new all-time high of 157 5/8; industrial firm Allied Signal, up 1 7/8 to 51 7/8; and sports-wear maker Nutmeg Industries, up 2 1/4 to 25 1/4 after it announced an acquisition.
Overseas, Frankfurt stocks rebounded, with the DAX average up 14.36 points to 1,721.66. But London suffered another losing day, as the Financial Times 100-share average fell 3.2 points to 2,405.4.
Credit
The 30-year Treasury bond eased 3/32 point, or 94 cents for every $1,000. The yield inched up to 7.91% from 7.89% Wednesday.
Bond traders ignored a report showing new claims for unemployment benefits rose 9,000 to 456,000 in the latest week.
Normally, the bond market welcomes such reports based on the assumption that slow growth reduces the chances of inflation heating up or interest rates rising.
Instead, traders were cautious in their dealings. They were waiting for a clearer economic picture to emerge today when the Labor Department releases its March report on the employment situation.
The federal funds rate, the interest on overnight loans between banks, was quoted at 4.00%, down from 7.00% late Wednesday, when the rate was skewed by technical factors.
Currency
The dollar fell in response to the increase in unemployment benefit claims.
Market participants bought dollars several weeks ago expecting that healthy economic reports would boost the currency’s value, traders said.
But the market has not been satisfied with the slightly better-than-expected economic data showing a sluggish recovery. Only much better indicators would push the dollar further, traders said.
In New York, the dollar fell to 1.644 German marks, down from 1.652 late Wednesday and to 133.70 Japanese yen from 134.50.
Commodities
Orange juice futures prices sagged after a government report said Brazil has a much larger chunk of the newly liberalized Japanese orange juice market than the United States.
Frozen concentrated orange juice for May delivery fell 2.25 cents to settle at $1.3955 a pound, the lowest price since March 5.
Elsewhere, precious metal prices fell, led by platinum, in a technically inspired retreat. April platinum fell $2.40 to $353.70 an ounce on the New York Merc. On New York’s Comex, April gold dropped $2 to $340.90; April silver fell 1.6 cents to $4.07.
Most energy prices set back slightly on the New York Merc, reflecting fading fears that Libya will withhold crude exports to protest U.N. sanctions. Light, sweet crude oil slipped 4 cents to $19.80 a barrel.
