Stocks Falter, Yields Rise on Job Data Jitters
Stocks turned mostly lower Thursday as interest rates shot up in the bond market on worries about today’s report on February employment and more signs that the economy may be too robust to keep inflation in check.
The Dow Jones industrial average fell 1.15 points to 6,944.70. The blue-chip barometer, which gained 93 points Wednesday, surrendered an early 42-point advance but withstood much of Thursday afternoon’s selling as nervous investors clung to big companies considered less volatile.
Meanwhile, the dollar rallied to a three-year high against the German mark on robust U.S. economic data.
The cautious mood contrasted with Wednesday’s session, when soothing comments by Federal Reserve Board Chairman Alan Greenspan eased investors’ fears that the central bank was planning some action to slow the stock market’s rise.
Heightening anxieties in advance of the employment report was Thursday’s news that orders to U.S. factories posted unexpectedly strong gains in January and that the number of first-time claims for jobless benefits plunged last week, pushing the four-week average to an eight-year low.
“The stock market is struggling to get a true sense of the strength of the economy and what will be the course of Fed policy,” said Charles White, managing director at Avatar Associates.
The bond market was also on guard before the jobs data. As the price of the key 30-year Treasury bond fell, its yield rose to 6.88% from Wednesday’s close of 6.82%.
Higher inflation makes fixed-income investments such as bonds less attractive, forcing down prices to improve their yield. Higher interest rates at the Fed or the bond market hurt stocks by slowing consumer borrowing and spending.
On the New York Stock Exchange, advancing issues outnumbered decliners by a narrow margin in heavy trading.
The Standard & Poor’s 500-stock list fell 3.43 points to 798.56, and the NYSE’s composite index fell 0.43 point to 420.24. The technology-laden Nasdaq composite index fell 13.66 points to 1,315.43.
Among Thursday’s highlights:
* With the release of more data showing a strong economy, investors moved away from consumer-product issues--steady earners considered safer bets amid signs of economic weakness. The Dow’s biggest decliners included Merck, down 1 3/4 to 92 1/4; Procter & Gamble, down 1 3/8 to 119; and Philip Morris, down 7/8 to 133 1/4.
* IBM rose 1 1/8 to 146 5/8 as one of the Dow’s strongest issues, but most bellwether technology shares declined. Compaq Computer fell 3 1/2 to 77 1/2, Intel fell 4 1/8 to 145 3/8, Microsoft fell 3 1/8 to 97 3/4, Oracle fell 3 3/16 to 36 9/16, Texas Instruments fell 2 3/4 to 80 1/2 and Cisco Systems fell 2 1/4 to 54 5/8.
* The Dow’s loss was tempered by gains in oil issues, which rose on optimism that growing global energy demand will spur profits. Texaco climbed 2 1/8 to 103 7/8 and Chevron jumped 1 1/8 to 66 1/2.
* Bank issues gained after Washington Mutual agreed to buy Great Western Financial for $6.6 billion. GW rose 1 7/8 to 46 7/8; Washington Mutual fell 1/4 to 53; and H.F. Ahmanson, whose hostile bid for GW was topped, lost 1 1/4 to 40 3/4.
Citicorp climbed 3/8 to 122 1/2, BankAmerica rose 1 7/8 to 118 3/4, Wells Fargo gained 3 1/4 to 312 1/2 and Bank of New York rose 3/4 to 40 5/8.
* Several retailers advanced after reporting February sales increases. Best Buy rose 1 1/8 to 9 3/4, Wal-Mart Stores gained 3/4 to 27 3/8 and Circuit City Stores rose 1 3/4 to 33 1/2.
In currency trading in New York, the dollar rose to 1.7160 German marks from 1.7127 on Wednesday. It fell to 121.13 Japanese yen, down from 121.21 on Wednesday.
Coffee prices suffered a setback following their recent rapid advance, but soybean prices powered to their highest level in 5 1/2 months.
May coffee futures on New York’s Coffee, Sugar and Cocoa Exchange closed off 6.95 cents per pound at 193.70 cents.
March futures on the Chicago Board of Trade closed up 16 3/4 cents a bushel at $8.18, just below an earlier 5 1/2-month high for the nearby contract of $8.18 1/2.
