Stocks End Mixed as Bond Yields Rise Again

The stock market struggled to another mixed close Thursday in the face of rising bond yields.

The Dow Jones industrial average inched up 3.97 points to 5,630.85, and most other key indexes also were higher on the day.

But losing stocks narrowly outnumbered winners on the New York Stock Exchange and on Nasdaq.

Still, some analysts were surprised that stocks performed as well as they did, given another rise in bond yields.

The Dow had slumped 43.72 points on Wednesday as comments by Federal Reserve Board Chairman Alan Greenspan on the strength of the U.S. economy doused any remaining hopes of an imminent Fed cut in interest rates.

Greenspan’s comments also helped pushed the yield on 30-year Treasury bonds from 6.58% Tuesday to 6.68% Wednesday. On Thursday the yield rose further, closing at 6.72%, the highest since March 19.

Although the stock market has avoided becoming too caught up in the latest rise in interest rates, some analysts warn that that nonchalant attitude might not last.

“With the bond market in a sloppy mood and the long bond knocking on a 6.75% yield, it will spell short-term trouble for the [stock] market,” predicted Peter Cardillo, director of research of Westfalia Investments.

Analysts also are worried about first-quarter corporate earnings reports, which will begin to inundate the market in two weeks.

“It’s been a rudderless market for a few days. Investors and traders are waiting for quarterly earnings reports,” said Eugene Peroni, technical analyst at Janney Montgomery Scott.

Still, “I think when all is said and done, earnings will be quite respectable and most companies will report on target,” Cardillo said.

Traders noted that buyers on Thursday were seeking shares of industrial companies with the most to gain from the stronger economy that Fed chief Greenspan described.

Indeed, signs of vitality in the economy could mean that the stock bull market has further to run, some experts say.

“Bear markets start with a recession,” not with renewed growth, argues Peter Canoni, managing director for equity investments at Aeltus Investment Management, which oversees $5.5 billion.

With today marking the end of the first quarter, the Dow industrial average is up 10% year-to-date, the Standard & Poor’s 500-stock index is up 5.4% and the Russell 2,000 index of smaller stocks is up 4.1%.

Among Thursday’s highlights:

* Leading gainers among the Dow stocks included chemical maker DuPont, up 1 to 82 1/4; Alcoa, up 1 1/2 to 64 3/8; GM, up 7/8 to 54 1/8; and 3M, up 1 3/8 to 66 3/8.

* Other industrial winners included Ford, up 5/8 to 34 1/4; Mobil, up 2 1/8 to 117 3/4; and Air Products and Chemicals, up 1 1/8 to 54 3/4.

* Transporation issues also were strong, with the Dow transports index rising 1.4% to 2,166.24.

* Some investors snapped up retail shares, including Tandy, up 1 1/4 to 46 5/8; Smart & Final, up 7/8 to 24 1/8; K mart, up 1/2 to 9 1/2; and Pacific Sunwear, up 1 to 12 1/2.

* In the tech sector, Cheyenne Software plunged 8 1/8 to 14 7/8 after warning that sales have slowed. And computer networker Cabletron Systems sank 3 1/4 to 66 1/4 after the company said its chief executive sold 1.3 million shares.

But Computer Associates rose 1 7/8 to 71 7/8, Ascend Communications gained 2 1/4 to 54 1/4 and America Online added 1 1/4 to 55 1/4.

* Trimedyne resurged 2 1/4 to 8 7/8 after the Irvine-based company received Food and Drug Administration clearance to market its OmniPulse Holmium pulsed laser and disposable fiber optic devices for use in ear, nose and throat surgery.

* Gold mining shares gave back recent gains as bullion prices retreated below the key $400 per ounce level. May gold futures contracts on the Comex tumbled $3.50 to $396.90 an ounce. Among mining firms, Newmont Gold lost 1 1/2 to 56 1/4 and Barrick Gold dropped 1 3/8 to 30 1/2.

* Penske Motorsports, which went public Wednesday, continued to surge, adding 5 1/4 to 37.