FINANCIAL MARKETS : Dow Loses 8.58 as Jobs Report Looms : Market Overview
Stocks fell amid concern about the health of the economy and inflation, with retailing and transportation stocks among those posting losses.
Blue chip stocks closed lower, weighed down by wariness ahead of today’s key jobless report, while the surge in gold prices also revived fears of inflation.
* Treasury bond yields retreated modestly in quiet trading as traders adjusted their positions in preparation for release of the jobless report.
* Gold prices renewed their rally, shooting higher in New York after breaking above a key technical resistance level in European trading.
Credit
Fresh concerns about the economy surfaced Wednesday with a disappointing government report on leading economic indicators. Sluggish retail sales figures Thursday reinforced those fears and sent retailing stocks lower.
“I think you have some serious concern about softness in the economy and how that’s going to affect earnings,” said Thomas Gallagher, chief U.S. equities trader at Yamaichi International.
The weak economic data was particularly disturbing against a backdrop of higher gold prices, which reignited fears of inflation.
The Dow Jones average fell 8.58 points to 3,544.87. Declining issues narrowly outpaced advancers on the New York Stock by a margin of about 10 to 9 on Big Board volume totaling 285.57 million shares, down from 295.56 million Wednesday.
The American Stock Exchange index, meanwhile, rose 0.94 point to 440.91, which was nonetheless a record high.
“There seemed to be just a general lack of buying interest ahead of tomorrow’s numbers,” said Robert Walberg, an analyst at MMS International.
Today’s employment report for May will be closely read for clues on the economy. Economists expect a steady unemployment rate of 7% and a 141,000 rise in payrolls.
The Labor Department said Thursday that initial claims for state unemployment benefits rose by 5,000 last week, much higher than the 2,000 increase that analysts expected.
Retail stocks fell in response to the disappointing May sales figures.
* Dayton Hudson fell 3 1/4 to 66 1/8. The company reported that same-store sales--those from stores open at least a year--rose 1.1% and that its second-quarter earnings will be significantly lower than last year’s.
* Wal-Mart fell 7/8 to 27 1/2. The retailer said same-store sales rose 6% in May. J.C. Penney slid 1 1/8 to 47 3/4 after reporting a 1.9% rise in same-store sales. Sears lost 1 1/4 to 54 3/8. Its same-store sales rose 5.9% in May.
* Federal Express fell 3 3/4 to 46 1/8. Two top managers resigned Wednesday, raising concerns that the company is having trouble keeping experienced executives. Donaldson, Lufkin & Jenrette Securities Corp. removed the stock from its recommended list.
* Burlington Northern retreated 2 3/4 to 51. The company said expectations of second-quarter earnings of 82 cents per share were probably too high.
* Allstate Corp.’s new issue accounted for more than 28 million shares of the Big Board’s volume, as the spinoff from Sears, Roebuck & Co. closed at 29 3/8, up from a pricing of 27. It was the biggest initial public offering in Wall Street history.
* Auto stocks rose on late-May sales figures. Ford advanced 2 3/8 to 55 3/8, Chrysler rose 1 to 46 3/8, and General Motors added 3/4 to 41.
Overseas, stocks finished sharply up in Tokyo, with the 225-share Nikkei average ending up 384.30 points, or 1.9%, to 21,076.00. Frankfurt’s 30-share DAX average closed up 4.41 points to 1,629.62. Share prices fell on the London stock exchange. At the close, the Financial Times 100-share average was down 10.2 points to 2,852.8.
Credit
The yield on the Treasury’s main 30-year bond dipped again, to 6.86% from 6.87% on Wednesday as its price, which moves in the opposite direction, rose 0.1875 point, or $1.88 per $1,000 in face value. It was the yield’s third straight decline since hitting 6.98% late last Friday.
The market’s moderate advance, concentrated among intermediate and long-term Treasuries, was partly attributed to heavy buying by municipalities.
Numerous towns and cities have rushed out new municipal bonds to take advantage of this week’s tumble in long-term Treasury interest rates, which are used to set municipal bond rates.
Most plan to use the proceeds to redeem higher-yielding debt. But until the expiration of clauses that prohibit them from paying back the debt before its maturity date, most municipalities have been storing the proceeds by buying Treasuries.
Many bond traders stayed on the sidelines, waiting for the release of the employment statistics.
Ward McCarthy, managing director at Stone & McCarthy Research Associates Inc. in Princeton, N.J., said the market will have little reaction to the data unless it shows a change of 100,000 jobs above or below expectations.
The federal funds rate, the interest on overnight loans between banks, fell to 3% from 3.0625% late Wednesday.
Other Markets
On the Commodity Exchange in New York, gold for current delivery soared $5.40 an ounce to $374.60. Gold’s strong advance past the important $371 level came after it retreated more than $12 an ounce in three straight sessions of losses in New York.
Ben Pugliesi, chief dealer and director of precious metals at Swiss Bank Corp. in New York, said gold continued to trade in a tight range of buying and selling dominated by several major market participants.
“There are a few large players who are muscling it around,” Pugliesi said. “The market has a little bit more upside potential.”
Silver for current delivery rose 9 cents an ounce to $4.447 on New York’s Comex. Meanwhile, light, sweet crude oil for July delivery fell 29 cents to $19.74 a barrel on the New York Merc.
In currency trading, the dollar meandered higher against most major foreign currencies in quiet trading.
In New York, the dollar closed at 107.25 Japanese yen and 1.629 German marks, up from Wednesday’s 107.15 yen and 1.595 marks.
Market Roundup, D6
