Blue Chips Snap 5-Session Slide; Bond Yields Ease
The Dow Jones industrial average snapped a five-session losing streak with a tiny gain, but most stocks ended lower Monday in light trading.
Technology and more speculative issues struggled again amid concerns about profits, weighing down the Nasdaq market.
The Dow industrials rose just 3.33 points to 5,652.78, giving back most of a late rally with bonds, but ending a five-session slide that had amounted to less than 50 points, punctuating the prevailing uncertainties about the direction of inflation and interest rates.
Declining issues outnumbered advancers by a 10-9 margin on the New York Stock Exchange, where volume totaled just 298.33 million shares. That was well below Friday’s total and the first tally below 300 million since late December.
“We may be setting the tone for the summer,” said Ned Riley, chief investment officer at the Bank of Boston. “The market tone was reflecting a slightly firmer bond market.”
The NYSE’s composite index fell 0.28 point to 356.92, and the Standard & Poor’s 500-stock index fell 0.69 point to 665.16.
The Nasdaq composite index fell 5.54 point to 1,207.64, suffering from uncertainty about the prospects for technology-related and smaller companies, which are heavily dependent on a strong economy.
Among the leading Nasdaq technology issues, Cisco Systems fell 7/8 to 54 3/8 and Sun Microsystems fell 1 1/8 to 55 7/8. But Microsoft rose 1 5/8 to 124 5/8 after the software giant backed analysts’ earnings projections.
A midafternoon rally in bond prices helped ease interest rates for the third straight day, spurring a brief bounce in the blue-chip sector. The yield on the Treasury’s main 30-year bond fell to 7.06% from 7.08% on Friday.
Last week, the benchmark yield jumped to a 13-month high in the aftermath of the latest in a series of robust employment reports.
Investors have been frustrated by a series of conflicting signals on inflation, with most fearing recent indications of rising payroll and wage levels, which could translate into too much consumer demand, pushing up prices. The immediate concern is whether the inflation-leery Federal Reserve will raise interest rates in early July.
On Wednesday, the Fed publishes its Beige Book report on regional business conditions, which the central bank’s policymakers use as the basis for their discussions on interest rate policy. But first, Wall Street will see today’s release of the housing starts report for May, which is expected to show a drop to 1.49 million units from 1.52 million in April.
Among Monday’s highlights:
* Oil company stocks rose as crude futures soared to their highest level in a month on escalating tensions between Iraq and the United Nations, which could delay the return of Iraqi oil to the market. Exxon rose 1 to 84 1/2; Texaco gained 5/8 to 84 1/8; and Chevron rose 3/8 to 60. Crude oil for July delivery jumped $1.80 to $22.14 a barrel at the New York Mercantile Exchange.
* International Rectifier lost 1 7/8 to 19 1/4. The company cited Montgomery Securities’ downgrading for the stock’s fall.
* AptarGroup shed 3 3/8 to 36 3/8 after forecasting disappointing second-quarter earnings.
* Intel fell 1 to 72. Advanced Micro Devices began shipping the AMD-K5-PR100, a 100-megahertz processing chip designed to compete with Intel’s Pentium chip. Advanced Micro slipped 1/8 to 19 1/8.
* Bay Networks fell 1/2 to 26 5/8 and Penril DataComm Networks rose 3 5/8 to 13 5/8 after Bay said it would acquire the digital signal-processing modem business of Penril’s Penril Datability Networks subsidiary in a deal valued at $120 million.
* Sports Authority rose 1 3/4 to 33 1/4 after setting a 3-for-2 stock split.
Copper prices eked out small gains as traders believed the Japanese trading house, Sumitomo Corp., no longer held a large position in the market. Last week, Sumitomo reported losing $1.8 billion in trading in the past decade.
Market Roundup, D8
