Stocks Drift Down; Inflation Fears Spur Rates
Stocks drifted further away from record territory Thursday as some signs of economic strength stirred lingering inflation worries, sending interest rates higher again in the bond market.
The Dow Jones industrial average fell 8.95 points to 5,921.67, rebounding from an early 26-point loss but extending a week-long slide from record levels and its first-ever move above 6,000 on Monday.
Broader measures also recovered from steeper losses in the morning but the rebound was cut short by a worsening bond market.
Bonds fell amid indications of strength in September sales results at department stores and news that first-time claims for jobless benefits fell by 22,000 last week to 319,000, the lowest level in five weeks.
As bond prices fell, the yield on the 30-year Treasury bond--a key determinant of borrowing costs--rose to 6.88% from late Wednesday’s 6.83%.
Neither retail sales figures nor weekly jobless claims are among the most closely watched of economic indicators. But the data served as a reminder of inflationary pressures in a still robust economy and came just before Friday’s and next Tuesday’s key reports on the direction of wholesale and retail prices for September.
“People are worried that retail sales may be picking up a bit and that maybe the inflation numbers that are coming out will be a little higher than they have been,” said Robert Streed, senior investment advisor at Northern Trust in Chicago.
Stocks have struggled this week amid growing caution before the impending release of company earnings reports and inflation data for September.
With the bond market providing four consecutive days of rising interest rates as an excuse, investors have been securing profits from the stock market’s run to record heights since mid-September. But in the absence of any truly discouraging news, the selling pressure has been limited.
“The market seems to move in jumps and then drift,” Streed said. “We had a nice run a week ago and the market’s been drifting since then.”
In their monthly sales reports, the nation’s retailers showed mixed results for September, with the figures varying widely from chain to chain and within industry segments.
Still, the trend was strong enough to leave analysts upbeat about the Christmas selling season.
Declining issues outnumbered advancers by nearly a 7-6 margin on the New York Stock Exchange.
The Standard & Poor’s 500-stock index fell 2.13 points to 694.61 and the NYSE’s composite index fell 1.00 point to 370.35.
The Nasdaq composite index fell 1.01 points to 1,236.97 and the American Stock Exchange’s market value index fell 0.11 point to 579.99.
Among Thursday’s highlights:
* A number of retailers saw gains because of optimism that Christmas sales will be bright. Sears was up 1/2 at 48 1/4; Gap rose 1 1/2 to 28 1/4. TJX climbed 2 to 39, J.C. Penney rose 1 3/8 to 53 7/8 and May Department Stores leaped 1 5/8 to 47 7/8.
* Lucent Technologies shares reached a record high as the company proves it can prosper after its spinoff from AT&T.; Lucent shares rose 3/4 to 48 after hitting a record 48 3/4 earlier in the day.
* An initial public offering of Gulfstream Aerospace’s shares rose 1 3/4 to 25 3/4 in their first day of trading.
Market Roundup, D7
* INVESTOR SPOTLIGHT
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