FINANCIAL MARKETS : Stocks Mixed, Rates Rise; Investors Fear Rate Hike
Stocks finished on a mixed note Thursday as bond yields rose and investors worried about another possible rise in interest rates. The dollar also weakened.
The Dow Jones industrial average declined 6.73 to 3,850.92, reversing direction after three consecutive days of gains totaling 24 points. But advancing issues outnumbered decliners by 1,156 to 1,076 on the New York Stock Exchange, where volume totaled 309.15 million shares, against 319.51 million on Thursday.
Broad market indexes were mixed. A rally in technology shares helped support the Nasdaq composite early in the day, but the index closed down 0.18 point at 745.66.
In the bond market, Treasury bond yields rose as traders worried that December employment data due out today would show further evidence of economic strength.
The bellwether 30-year bond yield rose to 7.88% from 7.85% Thursday. The long bond’s price, which falls when rate yields rise, dropped 3/8 point, or $3.75 per $1,000 in face value.
Analysts said traders refrained from making major new commitments to the bond market while awaiting the this morning’s release of the U.S. Labor Department employment report.
Bonds were also weighed down by a weaker dollar. A stronger dollar Wednesday was the primary force behind the buying that had enabled the bond market to snap a losing streak.
The dollar closed in New York at 1.551 German marks, down from 1.559 marks Wednesday. It also fell against the Japanese yen, closing at 100.93 yen, down from 101.35 yen.
The markets failed to react to two economic reports. The Labor Department said new claims for state unemployment benefits jumped by 14,000 last week to the highest level in nearly six months, but analysts said the surge was due to a seasonal quirk.
And the Commerce Department said orders to factories surged 2.6% in November, more than analysts had expected.
Stocks of Mexican companies traded in the United States declined, despite a slight firming in the Mexican market. Mexico’s new finance minister, Guillermo Ortiz, met with investors in New York to try to shore up market confidence in that country’s economic recovery plan. Mexico’s Bolsa index was mostly flat Thursday, finishing at 2,273.10, up 3.23 points.
Among the market highlights:
* Telefonos de Mexico led in volume on the NYSE, with 10.67 million shares changing hands, and were down 1/8 at 38. Grupo Tribasa was down 1 1/8 at 13 1/8, Grupo Televisa was unchanged at 28 5/8, and the Mexico Fund fell 3/8 to 20 1/2.
* Dole Food rose 5/8 to 25 after Seagram Co. said it agreed to buy the firm’s fruit juice business for $285 million in cash. Seagram slipped 1/8 to 29 3/8.
* Auto stocks, which set the pace with their strong gains on Wednesday, were mixed Thursday. Chrysler rose 3/4 to 51 5/8, while Ford eased 1/4 to 28 3/8 and General Motors slipped 1/4 to 43.
* Takeover speculation boosted Kemper Corp. Financial columnist Dan Dorfman said on CNBC-TV there were rumors of a $50-per-share bid coming. Kemper rose 1 3/4 to 41 1/4.
* Retail stocks were mostly higher after chain stores released December sales figures. Wal-Mart rose 1/4 to 21 7/8, and Dayton Hudson rallied 1 1/8 to 71.
* Sports Authority fell 2 7/8 to 16 7/8 after reporting a rise of only 2% in same-store sales for December.
* Tiffany sank 5 7/8 to 34 1/8. Goldman Sachs said it downgraded the luxury retailer’s stock.
* Among the big losers, Gymboree’s stock slumped 4 to 23 after the retailer reported disappointing December same-store sales.
* Technology issues rose early in the session but ended the day mixed. Adobe Systems added 1 1/8 to 29 7/8 after the software company reported stronger-than-expected net earnings for 1994.
Elsewhere overseas, stocks were lower. Tokyo stocks extended their New Year downward trend with the Nikkei average closing down 67.93 points at 19,616.11. In Frankfurt, the DAX 30-share average lost 9.78 points to close at 2,062.48 and London’s Financial Times 100-share average ended at 3,032.3, down 19.3 points.
