Lackluster Job Report Has Bond Yields Up : Market Overview
* The Treasury’s long-bond yield moved higher after market participants searching for direction got little help from the government’s long-awaited monthly employment report.
* The disappointing employment report and rising bonds yields pushed stock prices lower.
Credit
The April employment figures, a mixed economic bag, failed to change the market’s perception of a sluggish but growing economy. Instead, prices of long-term securities declined modestly on worries that the Treasury’s refunding auction next week will saturate the market for bonds and notes.
The yield on the 30-year bond rose to 6.84% from 6.80% Thursday, pushing its price down 9/16 point, or $5.63 per $1,000 in face amount.
Prices of short-term securities, meanwhile, fell only slightly or rose a little. Analysts traced the mixed performance to traders who sold longer-term bonds to buy shorter maturities ahead of the Treasury’s auction.
The Labor Department survey released Friday showed that the unemployment rate was unchanged at 7% last month, but that employers added 119,000 workers to their payrolls. Many economists had expected a gain of at least 150,000. Meanwhile, the federal funds rate, the interest on overnight loans between banks, slipped to 2.750% from late Thursday’s 2.875%.
Stocks
The anemic jobs data disappointed stock traders, who thrive on volatility.
The Dow Jones average fell 4.71 points to 3,437.19, leaving the blue chip index with a gain of 9.64 points on the week. Declining issues led advancers 8 to 7 on the NYSE. Big Board volume totaled 223.57 million shares, down from 255.46 million on Thursday.
Among the market highlights:
* Deep cyclical stocks ended mostly lower. Allied-Signal tumbled 1 3/8 to 62 7/8, Deere fell 1 1/8 to 56 7/8, and Boeing lost 5/8 to 38 7/8.
* Cigarette stocks rose after RJR Nabisco said it would discontinue discounts on its cheapest cigarette brand, a move that analysts said could prevent a large-scale price war. Philip Morris rose 1 7/8 to 51, and RJR gained 1/8 to 5 3/4, both in active trading on the NYSE.
* Airline stocks fell after major carriers said they would match 33% summer fare cuts announced by Northwest Airlines. AMR slid 1 to 67 5/8, and Delta lost 1 1/8 to 57 1/8.
* Technology stocks rose in NASDAQ trading. Apple Computer rose 3/4 to 54 3/4. It was followed by Cisco, up 3 1/2 at 48 3/4, and Lotus Development, up 1 1/2 at 32. On the NYSE, Compaq gained 1 1/8 to 50 3/4.
Stocks were mixed overseas. Tokyo’s Nikkei average closed at the day’s high of 20,811.36, up 189.33 points. London’s Financial Times 100-share average rose 7.4 points to 2,793.7. But in Frankfurt, the DAX-30 average ended 11.34 points lower at 1,611.92.
Other Markets
The dollar ended higher against major foreign currencies as traders, some of them nervous about possible military intervention in Bosnia, bought the U.S. currency.
In New York, the dollar closed at 110.30 Japanese yen and 1.584 German marks, up from Thursday’s 110.03 yen and 1.574 marks.
Precious metal futures retreated. Gold fell 70 cents an ounce to $356.70. Silver tumbled 8.9 cents to $4.261 an ounce.
On the New York Mercantile Exchange, light, sweet crude oil for June delivery slipped 3 cents to $20.44 a barrel.
