Rising Yields Weaken Stocks; Bull is 6 Today
Stocks closed mixed in the face of higher bond yields Thursday, on the eve of the 1990s bull market’s sixth anniversary.
The Dow Jones industrial average eased 8.95 points to 5,921.67, extending its weeklong slide. Other indexes were mixed. Falling stocks edged winners on the Big Board and on the Nasdaq market.
The bond market had a rough day, as yields rose for the fourth straight session. The bellwether 30-year Treasury bond yield climbed to 6.88% from 6.83% Wednesday, and now is the highest since Sept. 30.
Bond traders cited nervousness ahead of today’s wholesale inflation report for September. Those concerns were magnified by data Thursday suggesting more strength in the economy.
The government reported that unemployment benefit claims fell 22,000 last week from the prior week, to the lowest in more than a month. Also Thursday major retailers reported September sales that were surprisingly healthy.
If today’s wholesale inflation figure is higher than expected, it could reignite worries that the economy remains strong enough to drive inflation up--which could force the Federal Reserve Board to tighten credit before year’s end.
Those worries had been temporarily dampened by the September employment report a week ago, which showed a net loss of jobs in the economy. That report pushed bond yields to seven-week lows and stocks to record highs.
Although the focus today will be on the inflation data, it’s also the sixth anniversary of the start of the 1990s bull market, at least as measured by the Dow index.
The Dow bottomed at 2,365.10 six years ago today after tumbling 21% from late July, as Iraq invaded Kuwait. The Dow began to inch higher in late October of 1990, and finished the year at 2,634--even as the United States and its allies prepared for war. The market then rocketed in January with the fast Allied victory over Iraq.
The 1990s bull market now is the second-greatest in history, with a 153% rise in the Dow through its record close a week ago.
The key to keeping it going is stable interest rates and strong corporate earnings, many analysts say. Third-quarter earnings reports have just begun to trickle out and will be a deluge next week.
Among Thursday’s highlights:
* Many retail stocks rose as store chains reported September sales. May Department Stores climbed 1 5/8 to 47 7/8, TJX zoomed 2 to 39, J.C. Penney jumped 1 3/8 to 53 7/8 and Ross Stores shot up 3 1/8 to 38 3/8.
* Among stocks moving after earnings reports, Biogen surged 2 1/2 to 79 1/2, Phelps Dodge added 1/2 to 62 3/4 and semiconductor maker Altera soared 6 1/8 to 60. But GE eased 7/8 to 92 and Federal National Mortgage slipped 5/8 to 35 3/4.
* In the new issues market, Gulfstream Aerospace rose 1 3/4 to 25 3/4 in its first day of trading.
* Among Southland issues, defense electronics firm Logicon plunged 6 1/4 to 36 5/8 after Merrill Lynch analyst Byron Callan downgraded the stock to “long-term accumulate” from “buy.” Callan said his decision was based solely on the stock’s recent sharp run-up from $30 and that he sees no fundamental problem with the company. “I didn’t expect to see 5 or 6 points off the price” because of the rating change, he admitted.
In commodity trading, natural gas prices plunged on the New York Merc after a storage report showed higher-than-expected supplies. Other energy futures prices also dropped for the second straight day as worries about stockpiles of fuel eased.
Market Roundup, D7
* INVESTOR SPOTLIGHT
How this bull market compares with others of this century. D7
