Stocks Mixed as Bonds Brace for Jobs Report
The U.S. stock market closed mixed for a second straight session Thursday, as bond yields rose ahead of today’s nervously awaited March employment report.
Both markets appeared oblivious to another surge in key commodity prices, led by oil and corn.
On Wall Street the Dow Jones industrial average eased 6.86 points from Wednesday’s record high to end at 5,682.88, in a dull preholiday session.
Stock markets will be closed today for Good Friday. But the bond market will trade, and activity there will be determined by the government’s report on March employment, due this morning.
On March 8 the February employment report triggered a market earthquake, as the government said that 705,000 jobs were created that month--a huge number that implied a much stronger-than-expected economy.
The report sent bond yields soaring and sparked a 171-point plunge in the Dow index.
Many economists have insisted that the February data was flukey, and that March data would show extremely modest job creation that would balance-out the February number. Today’s report should show between 50,000 and 60,000 jobs were created in March, most economists estimate.
If the number is significantly higher, however, it could sent bond yields up again on fears of an economic revival that might eventually force the Federal Reserve Board to tighten credit.
On Thursday long-term bond yields rose to their highest levels in a week, as traders braced for today’s report. The 30-year Treasury bond yield ended at 6.67%, up from 6.62% Wednesday and the highest since last Friday. The five-year T-note yield jumped to 6.13% from 6.03%.
Although commodity prices continued to rise Thursday--a potentially inflationary signal--bond traders said the market was mostly fixated on the employment report.
Oil prices rose as colder weather was forecast for the Northeast. Corn hit record highs on fears of dwindling stockpiles. And cotton rose on worries about Argentina’s crop. All told, the gains were enough to push the Knight Ridder index of 17 key commodities up 0.5% to a 7 1/2-year high of 254.72.
The stock market seemed nonplussed by the action in commodities and bonds. Most broad stock indexes edged up, though losers slightly outnumbered winners on the New York Stock Exchange.
While the Dow slipped, the Nasdaq composite index of mostly smaller stocks hit a record high, adding 2.36 points to 1,118.21, surpassing the previous record of 1,117.79 set on Feb. 23.
Some analysts said the stock market’s mixed showing was more impressive than it might appear, given that AT&T; spinoff Lucent Technologies siphoned off $3 billion Thursday in the largest-ever initial stock offering in the U.S.
“The market was able to float this Lucent deal, which is incredible,” said Peter Coolidge, senior equity trader at Brean Murray Foster Securities. As an indicator of the public appetite for stocks, “This bodes well for the overall market,” he said.
Among Thursday’s highlights:
* Lucent jumped 3 5/8 from its offering price of 27 to close at 30 5/8 on the NYSE. Among other stocks making their debuts, technology-support firm DecisionOne jumped 3 7/8 to 21 7/8; Excite, which provides a popular Internet search directory, added 3 to 20; and Sapient, which develops client/server software, leaped 11 to 32.
* Energy stocks zoomed with rising crude prices. Mobil rose 1 3/8 to 118 7/8, Atlantic Richfield gained 3 3/8 to 123 and Reading & Bates soared 1 3/4 to 22.
* Airline shares continued to surge on earnings optimism, despite new fare wars. UAL, parent of United Airlines, rose 4 1/8 to 221 1/8, Continental class B shares jumped 1 1/2 to 59 5/8 and Delta jumped 2 7/8 to 81 1/2.
