Dow Eases, Yields Gain After Jobs Report
Stocks closed mixed Friday and bond yields inched up from seven-month lows on the heels of the October employment report.
The Dow Jones industrial average slipped 7.45 points to close at 6,021.93, as the bond market initially celebrated the jobs report, then changed its mind.
The bellwether 30-year Treasury bond yield, which had closed at 6.64% on Thursday in the wake of a flurry of data suggesting a slowing economy, fell to a seven-month low of 6.59% early Friday, but ended the day at 6.68%.
Traders said investors weren’t upset that the October jobs gain was slightly above expectations. The fact that average hourly wages didn’t rise in the month was a strong hint that wage inflation is abating, and that economic growth is moderating, analysts said.
The bond market’s afternoon sell-off was more related to the heavy supply of new debt coming to market next week, traders said. The Treasury will auction $38.5 billion in new 3-year, 10-year and 30-year notes and bonds.
Moreover, “A lot of traders have stepped to the sidelines to see what the elections will bring,” said Thom Brown, a managing director of Rutherford Brown & Catherwood. “There’s the fear of the Democrats carrying both houses of Congress, and there might be a nervous reaction fearing a return of an inflationary scenario.”
The stock market mostly treaded water Friday, after Thursday’s strong gains. Major indexes closed mixed, with the Nasdaq composite index of mostly smaller stocks adding 0.27 point to 1,221.78. But losers had the edge over winners on both Nasdaq and the New York Stock Exchange.
For the week, the Dow gained 14.91 points.
Meanwhile, falling prices for oil and grains continued to weigh on commodity markets, where the Commodity Research Bureau index of key futures prices lost 0.53 point to 237.30 Friday, a new 1996 low.
Crude oil prices ended lower for the fifth straight day as traders began to worry that tight oil supplies may not remain so for long. December oil futures fell 32 cents to $23.03 a barrel, the lowest since Aug. 30. For the week, the contract lost $1.83.
Among Friday’s highlights:
* MCI Communications’ disclosure that it is in merger talks with British Telecom sent MCI shares soaring before trading was halted. The last trade was 30 1/4, up 5 1/8. British Telecom shares traded on the NYSE fell 2 1/8 to 55 1/2.
The news stoked buying in other long-distance firms, including Sprint, up 4 1/4 to 43 1/2; LCI International, up 2 1/8 to 34; and Frontier, up 7/8 to 29 7/8. But AT&T;, MCI’s archrival, fell 1/2 to 34 1/2.
Among other telecom firms, GTE lost 1 5/8 to 40 1/2, while NYNEX added 1/2 to 45 and SBC Communications slipped 1/8 to 48 1/2.
* Most of the Dow’s loss could be traced to Boeing, which slid 3 1/2 to 91 7/8--the equivalent of more than 10 Dow points--on reports that developing the next generation of the 747 jumbo jet could cost 40% more than previously thought.
* Energy-related stocks were also weak. Atlantic Richfield fell 2 3/8 to 130 1/8, Halliburton lost 2 to 54 5/8 and Royal Dutch Petroleum dropped 3 3/8 to 162.
* Samsonite Luggage surged 3 3/16 to 36 15/16. The company on Thursday announced a restructuring and plans to cut 450 positions.
* Circuit City jumped 2 1/4 to 35 after the retailer said it will spin off 15% to 20% of its CarMax auto dealership to the public.
* Nike tumbled 4 3/8 to 54 3/4 after Montgomery Securities trimmed its second-quarter earnings estimate for the company, citing higher-than-expected marketing expenses.
In Mexico, stocks rose for a second day, bolstered by optimism over a stabilizing peso. The peso closed at about 7.95 to the dollar. The Bolsa stock index jumped 1.3%.
Market Roundup, D4
