FINANCIAL MARKETS : Dow Off 18.66 as Rate Cut Hopes Fade
Blue chip stocks fell and bond yields rose Friday as surprisingly strong June retail sales dimmed prospects for another interest rate cut by the Federal Reserve.
But the Nasdaq index rose to set its fourth record for the week on rising technology stocks.
The Dow Jones industrial average fell 18.66 to 4,708.82 after recouping about half of a nearly 40-point drop early in the session. It gained 6.09 points on the week. In the broader market, declining issues beat advances by about 7 to 4 on the New York Stock Exchange. Big Board volume fell to a moderate 312.94 million shares, down from 388.49 million Thursday.
The Nasdaq Composite index rose 5.18 points to 999.33, beating the previous closing high set just Thursday.
The Nasdaq Stock Market was forced to briefly shut down a trading system for small investors Friday due to heavy activity, capping a week that has seen the computerized market twice set volume records. To deal with the increased activity, Nasdaq shut down a trading system geared for small investors known as the Small Order Execution System, or SOES, for about an hour through 10:55 a.m. EDT, said Marc Beauchamp, a Nasdaq spokesman.
Bond yields rose Friday as reports on consumer prices and retail sales suggested the economy isn’t slowing down as much as previously thought.
The new data diminished the prospect that the Federal Reserve would soon lower interest rates again to stimulate the economy.
The benchmark 30-year bond yielded five basis points to 6.60%. Its price, which falls when yields rise, dropped a full point before recovering some ground in the afternoon. It finished down 21/32 point, or $6.56 per $1,000 in face value.
The NYSE’s composite index fell 0.89 point to 298.90. The Standard & Poor’s 500-stock index fell 1.11 point by 559.89.
But some big name technology stocks still scored solid gains.
Among Friday’s highlights:
* Intel Corp. rose 1 7/8 to 75 1/2, while Texas Instruments gained 1/8 to 153 3/4 and Motorola rose 5/8 to 75 3/4. International Business Machines rose 1/8 to 103 7/8 and Micron Technology gained 1 1/2 to 63.
* Microsoft added 2 5/16 to 102 7/16, after the software maker finished writing Windows 95, a long-awaited update of the foundation program for most personal computers.
Earnings disappointments took their toll on some stocks.
* Colgate-Palmolive dropped 3 7/8 to 68 1/4. The personal-care products maker estimated its second-quarter net profits at 95 cents per share, below the analysts’ previous estimate of $1.04 to $1.05.
* Philip Morris fell for the second straight session, losing 1 to 74 3/4 on the FDA’s renewed efforts to regulate nicotine.
* Allstate fell 1 1/4 to 31 1/2. The company said the stock has been volatile recently because of a distribution of shares this week to Sears, Roebuck & Co. Inc. shareholders.
Overseas, Frankfurt’s 30-share DAX average closed down 29.52 points at 2,184.90. In London, the Financial Times 100-share average fell 18.0 points to 3,429.2, while Tokyo’s 225-share Nikkei average rose to 16,517.70, up 12.03 points.
Mexico’s Bolsa index fell 43.30 points, or 1.68%, to 2,531.49.
