Dow Drops for 3rd Straight Session; Bond Yields Rise
Blue-chip stocks ended lower Monday as the market continued to swing wildly ahead of key economic data this week.
Bond prices fell for the fourth consecutive session amid fears of a potential German rate hike, while the dollar rose against the Japanese yen to its highest level in more than two weeks.
The Dow Jones industrial average ended down 28.34 points at 7,859.57 after giving back an early rally.
The weakness among blue chips weighed down several other popular stock indexes even though advancing issues outnumbered decliners in the broad market.
“Smaller and mid-sized companies are starting to move higher, and there’s a logical case for that happening,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore. “The big concern with the Coca-Colas and Gillettes is valuation. On a relative basis, [smaller companies] are cheap.”
The Dow had been up 56 points at its peak but gave way to late-day profit-taking, sapped by a soft bond market.
It was the third consecutive setback for blue chips and came after the Dow on Friday rallied back from a 177-point deficit to close down only 6 points.
Advancing issues outnumbered decliners by nearly a 4-to-3 margin on the New York Stock Exchange in light trading, which dealers said may have exacerbated the stock market’s movements.
The Standard & Poor’s 500-stock list fell 3.39 points to 920.16, and the NYSE composite index fell 0.90 point to 478.03. The Russell 2,000 index of smaller companies rose 2.36 points to 418.09.
The Nasdaq composite index, which also has a large group of smaller companies, rose 2.88 points to 1,601.57, held back by sluggishness among its blue-chip technology shares.
Although the economic calendar is relatively light this week, there was concern about today’s reports on durable-goods orders, existing-home sales and last week’s retail activity.
The pending economic reports weighed on the bond market, where the price of the key 30-year Treasury bond fell, raising its yield to 6.67% from Friday’s close at 6.65%.
“It was overdue that we would have a quiet day,” said Robert Freedman, chief investment officer for John Hancock Funds in Boston. “I would guess that this week will be fairly quiet as we approach the [Labor Day] holiday. A lot of people are still away on vacation.” U.S. financial markets will be closed Monday.
Among Monday’s highlights:
* Consumer product shares were the Dow’s weakest issues: Procter & Gamble fell $2.25 to $136.25; Coca-Cola fell $1 to $59.69; and Johnson & Johnson fell 94 cents to $57.75. General Motors was among the Dow’s strongest components for the second consecutive session, rising $1.38 to $66.19.
* In the technology sector, Intel fell $2 to $94.19, and Microsoft slipped 75 cents to $136.50.
The dollar rose as high as 118.84 Japanese yen amid concern over the persistent weakness of Southeast Asian currencies. It fetched 118.79 yen in New York trading, versus 118.31 yen Friday.
Gasoline prices fell sharply as traders ignored lingering production problems at some refineries and said rising imports could meet any supply shortages at the end of the summer vacation season.
At the New York Mercantile Exchange, unleaded gasoline for September delivery closed 2.98 cents lower at 64.50 cents a gallon. September crude oil slid 44 cents to $19.26 a barrel and September heating oil fell 1.21 cents to 52.20 cents a gallon.
Overseas, Tokyo’s Nikkei stock average rose slightly and Frankfurt’s DAX index fell 0.3%. London markets were closed for a national holiday.
Market Roundup, D12
