Blue Chips Retreat, Bonds Rally
The Dow Jones industrial average fell Friday as Wall Street took a breather a day after the blue-chip index closed above 7,000 points for the first time.
Bonds rose on news that wholesale prices fell for the first time in more than two years in January.
U.S. bond and currency markets ended early in observance of the Presidents Day holiday on Monday.
The 30-share Dow fell 33.48 points to 6,988.96, while the broader market ended mixed. The index jumped nearly 61 points to a record 7,022.44 on Thursday, capping a three-session rally of 216 points. For the week, it rose 133.16 points.
“We saw a little bit of profit taking. I don’t think there’s anything more to read into it,” said Phil Orlando, chief investment officer at Value Line Asset Management.
As if recent reports hadn’t painted a rosy enough picture of the economy, the Labor Department said wholesale prices fell 0.3% last month, the first drop since October 1994.
In addition, the Commerce Department said industrial production was unchanged in January. That was in line with analyst expectations.
The news stunned economists and triggered a bond market rally that lifted the 30-year Treasury more than half a point, which lowered its yield to 6.53% from 6.62% on Thursday.
But stocks did not follow bonds, with equity investors just a bit out of breath after the recent rally and with markets closed Monday.
“There’s a tendency to take profits once the market reaches a plateau, and people are thinking, ‘Let me get this done today so I can have some peace this weekend,’ ” said Peggy Farley, chief executive at Amas Securities.
With the Dow already at or near year-end targets set by many Wall Street professionals, some strategists predicted prices will soon level off for a time.
Broader market indexes were also lower, but on the New York Stock Exchange, the number of advancing issues still beat decliners by a 10-9 margin.
The NYSE composite index fell 0.94 point to 423.48. The Standard & Poor’s 500-stock index lost 3.37 points to 808.45. Both had set records Thursday.
The Nasdaq composite index fell 3.62 points to 1,367.19, weighed down by falling computer shares. The American Stock Exchange market value index lost 1.25 points to 594.15.
Among Friday’s highlights:
* Although it was among the stocks that drove the Dow to its new record Thursday, drug maker Merck lost 2 1/4 to 97 3/8. Procter & Gamble fell 2 to 124 7/8.
* AMR, parent of American Airlines, fell 1 1/4 to 81 7/8 as a midnight deadline for a pilots strike loomed.
* Technology stocks were among the weaker issues, with usual bellwethers leading the way. Intel lost 2 1/2 to 154 1/2, Microsoft fell 2 1/8 to 97 7/8 and IBM lost 1 3/8 to 145.
* Stocks of major banks, however, retained their strength. Citicorp gained 2 3/4 to 126 1/4 and NationsBank was up 2 to 119 3/4.
* Disney rose 3/4 to a record close of 78 1/8 amid expectations of continued double-digit earnings growth paced by theme parks, films and video releases.
In currency trading, the dollar finished higher against most major currencies. In intraday trading, it reached a high of 124.80 yen, the strongest level since February 1993 and the first new four-year high against the yen in a week. It settled in New York at 124.22 yen, off from 124.35 on Thursday.
Mexico City’s Bolsa rose to a record close after the peso surged to a 16-week high against the dollar and industrial activity rose in line with investor expectations.
