FINANCIAL MARKETS : Long-Term Rates Rise; Stocks Mixed : Market Overview
Interest rates rose Wednesday as oil prices surged and in anticipation of government reports expected to show growth in the economy.
* The Dow Jones industrials closed a fraction higher, but the broad market was mixed, held back by oil’s spurt and the jump in interest rates.
Credit
Bond traders appeared unnerved by a 71-cent-a-barrel jump in oil prices triggered by OPEC’s agreement to halt runaway production. That raised fears of renewed global inflation.
The yield on the Treasury’s key 30-year bond rose to 5.99% from 5.94% on Tuesday. Shorter-term yields also rose sharply.
But analysts said activity was generally light as investors hesitated to make major purchases in the final days of the third quarter. However, some portfolio managers were selling bonds in order to show quarterly profits for their funds.
Analysts also traced some selling to a Conference Board report that newspaper help-wanted advertising volume rose in August, suggesting that the weak labor market is improving modestly.
Dana Johnson, head of market analysis at First Chicago Capital Markets in Chicago, said the report led to speculation that the closely watched report on September employment, due out next Friday, will show significant job gains.
The bond market often reacts negatively to signs of economic growth, which can mean inflation and higher interest rates. Either can erode the value of Treasury securities and other fixed-income investments.
Another report, due out today, was expected to show a sharp rise in sales of new houses in August.
“With some numbers getting a little closer to release time, the market is backing off a bit,” said Kevin Flanagan, a money market economist at Dean Witter.
Other Markets
Stocks were mixed, with some blue-chip indexes helped by a big rally in energy-related issues.
The Dow industrials, for example, added 0.28 point to 3,566.30, thanks entirely to its three large oil stock components.
In the broader market, declining issues narrowly outnumbered advancing ones on the New York Stock Exchange, where volume came to 277.77 million shares.
In the Nasdaq market of mostly smaller stocks, winners topped losers 12 to 10, but the composite index still fell 0.49 point to 763.17, breaking a four-session string of record closes.
However, the Russell 2000 index, another small-stock measure, rose 0.82 point to a new high of 251.51, indicating underlying strength in the small-company market, traders said.
Among the market highlights:
* OPEC’s promise to rein in production sparked a major rally in energy stocks. Chevron rose 2 1/2 to 97, Atlantic Richfield gained 4 1/4 to 116 1/8, Exxon added 1 to 6 5/8, Unocal leaped 1 5/8 to 28 3/4 and Schlumberger jumped 2 3/8 to 66 3/8. Among smaller firms, Anadarko Petroleum jumped 5 1/8 to 47 3/8.
* Semiconductor shares, among the third quarter’s hottest, were hit by profit taking. Micron Technology slumped 4 3/8 to 55 3/8 and Advanced Micro Devices sank 1 7/8 to 28 1/8.
* Among Southland issues, Pinkerton’s fell 2 to 17 after the security services firm said third-quarter earnings will be at or below break-even.
Also, Glendale Federal was unchanged at 8 3/8. New York investor Leon Cooperman said he holds the equivalent of a 5.9% stake in the S&L;, for investment purposes.
In other markets:
* Gold for current delivery closed at $352.70 an ounce on the Comex, off $2.70 from Tuesday. Silver closed at $4.01 an ounce, down from $4.08 on Tuesday.
* The dollar was little changed against other major currencies as traders waited to see which direction the greenback would take since the Russian political situation has calmed.
The dollar finished in New York at 105.05 Japanese yen and 1.613 German marks, up from 104.90 and 1.6128 on Tuesday.
Market Roundup, D10
