Stock Surge Pauses for Word on Employment
The stock market’s record-setting advance paused Thursday, pulling most indexes lower as investors waited to see if today’s employment report justifies an optimistic outlook on inflation and interest rates.
The Dow Jones industrial average, which closed at new highs Tuesday and Wednesday, slipped 1.12 points to 5,932.85 after trading slightly lower for most of the day.
The session was characterized as a natural pause in the market’s speedy recovery from July’s tumbles, which has been highlighted by a 750-point rebound in the Dow.
“Today was a timeout. The market has done well in recent days, so it deserves a rest, and we have this employment report in front of us,” said A. Marshall Acuff Jr., market strategist at Smith Barney.
The monthly employment reading has jolted the financial markets repeatedly this year with indications of rising payroll costs that could prompt manufacturers to raise prices. But many economists expect the September data to provide further evidence that economic growth is slowing enough to keep inflation under control.
Last week, Federal Reserve Board policymakers decided not to boost the central bank’s key lending rates. Higher borrowing costs would help contain inflation by slowing demand, but the drop in consumer spending can hurt stocks.
Still, given the number of sharp sell-offs that have followed the employment report, it was surprising that it took until Thursday for investors to step back, Acuff said.
“The markets had done well this week in the face of a statistic that this year has produced a great deal of volatility. [Investors] knew the report was coming, but it was a nonevent until today,” he said, attributing the calm to “optimism that maybe the torrid pace of job creation is beginning to slow down. But we don’t know until we see it.”
There was little reaction to other reports, on factory orders and jobless benefits, that were released Thursday. The 30-year Treasury bond yield ended the day unchanged at 6.83%.
Declining issues outnumbered advancers by a 10-9 margin on the New York Stock Exchange, where volume totaled 386.09 million shares, down from Wednesday’s 439.29 million.
The Standard & Poor’s 500-stock index fell 1.23 points to 692.78, and the NYSE’s composite index fell 0.40 point to 370.14. Both indexes had closed at record highs Monday, Tuesday and Wednesday.
The Nasdaq composite index fell 3.02 points to 1,233.09, but the American Stock Exchange’s market value index rose 0.75 point to 572.60.
Among Thursday’s highlights:
* Underscoring the day’s inactivity, there were only three Dow issues that moved more than a point. Philip Morris fell 1 3/8 to 91, Sears rose 1 3/8 to 46 1/2 and AlliedSignal rose 1 1/8 to 66 5/8.
* With Philip Morris, other tobacco shares fell after the Florida Supreme Court ruled that a class-action lawsuit against the industry could proceed to trial in the spring. Defendants include R.J. Reynolds Tobacco, a unit of RJR Nabisco Holdings, which fell 3/8 to 26 1/2; Brown & Williamson, a unit of BAT Industries, off 1/4 to 13 1/2 in U.S. trading; and Lorillard Tobacco, a unit of Loews Corp., up 1/4 to 79 1/2.
* A.G. Edwards slipped 3/8 to 29 3/4 after hitting a 52-week high of 30 3/4, and Merrill Lynch fell 1/4 to 68 3/4.
* Monsanto rose 1 1/4 to 39 7/8 after PaineWebber said it expected stronger third-quarter earnings.
* Among those warning of earnings shortfalls, EIS International, a maker of phone call processing systems, tumbled 5 1/8 to 7 7/8; Peak Technologies slumped 9 7/8 to 11 7/8; and Wall Data shed 9 1/4 to 14.
Overseas, Tokyo’s Nikkei stock average fell 0.8%, and London’s FTSE-100 fell 0.4%. German financial markets were closed for a holiday.
In Hong Kong, the Hang Seng index powered through the 12,000-point level, closing above that mark for the first time since February 1994, buoyed by a strong local economic outlook and record highs in overseas markets. The Hang Seng closed up 62.68 points at 12,014.56.
Market Roundup, D6
