Rise in Yields Clips Stocks; Dow Off 12.65
Blue-chip stocks, leaderless and hampered by a sell-off in bonds, limped to a lower close Wednesday, one day after storming to a record high.
The Dow Jones industrial average lost 12.65 points to 5,629.77, retreating from the previous session’s record close of 5,642.42.
In the broader market, declining issues led advances 1,172 to 1,121 on active volume of 428 million shares on the New York Stock Exchange.
“The market is struggling for new leadership,” said Paul Rabbit, analyst at Oppenheimer & Co. “We had a loss of leadership in the technologies. There was an attempt to ignite some leadership among the retailers earlier this week, but that fell short today.”
Rabbit said a rise in the long-term bond yield siphoned traders away from the stock market.
The yield of the Treasury’s main 30-year bond rose to 6.46% from 6.37% on Tuesday.
“Expectations for a rate cut are decreasing,” said Anthony Conroy, director of equity trading at BT Global Asset Management, a unit of Bankers Trust New York Corp.
Some overseas bond traders were seen selling U.S. bonds in reaction to a Wall Street Journal article Wednesday that said Labor Department figures today will show job strength in several regions of the nation. That’s due to the use of recalculated data for the state-by-state figures, the newspaper said.
Analysts said stock traders were also gearing up for today’s closely watched report on weekly U.S. jobless claims amid speculation that it will show that fewer people filed for unemployment benefits.
But there was also a suspicion that even if job growth rebounds from a steep drop in January, the labor market still appears weak.
Meanwhile, high-technology stocks suffered from news on individual companies and recent earnings warnings. Texas Instruments fell 2 3/4 to 47 5/8 after the company said it had lowered its expectations for global chip market growth due to a drop in prices for dynamic random access memory, or DRAM, chips.
After similar warnings from Micron Technology and LSI Logic last week, some investors concluded that chip shares will languish until the excess supply dries up. Since peaking in September, many of the companies lost about half their value. Motorola was down 1 1/8 at 53, Sun Microsystems lost 2 5/8 at 45 and Intel sank 2 1/8 at 53 1/4.
Among Wednesday’s highlights:
* Glenayre Technologies topped the Nasdaq most-active list and plunged 10 to 32 1/4 after saying late Tuesday that a proposed Federal Communications Commission rule may result in a $10-million to $12-million drop in sales for the first quarter.
* Data Processing Resources, a Newport Beach-based provider of information technology personnel services, rose 7 1/8 to 21 1/8 after pricing its initial public offering of 2.64 million shares at 14.
* Among special situations, Nike’s stock hit a 52-week high after Morgan Stanley upgraded its rating on the company. The stock rose 3 3/8 at 72 5/8.
* Consumer stocks were big losers after gaining earlier this week. The Dow industrials were led lower by consumer stocks Merck, down 2 1/4 to 66 1/4; Procter & Gamble, down 1 to 86 1/2; Sears, down 1 1/8 to 47 7/8, and McDonald’s, down 3/8 to 52 3/8.
Coca Cola, another consumer stock and Dow component, fell 1 1/8 to 83 1/8, even though Morgan Stanley upgraded the stock.
* Oil stocks rose along with oil prices. Texaco added 2 7/8 to 83 1/8, Exxon advanced 1 3/8 to 82 1/4, and Chevron rose 5/8 to 56. All are Dow industrial components.
The April contract for light, sweet crude rose 65 cents in New York to $20.19 a barrel. The American Petroleum Institute said Tuesday that the nation’s oil stockpiles are at their lowest levels since 1977.
