Blue Chips Post Loss; Bonds Edge a Bit Higher
Blue-chip stocks fell Thursday as investors remained troubled by Federal Reserve Board Chairman Alan Greenspan’s remarks and interest rate hikes in Europe, which made U.S. investments less attractive.
The Dow Jones industrial average ended down 33.64 points at 8,061.42 following Wednesday’s steep sell-off of 83 points on Greenspan’s comments that inflation remains a threat.
The technology sector bucked the trend for the second straight day amid growing optimism about the impending flood of third-quarter profit reports. The technology-heavy Nasdaq composite index and the Russell 2,000 index of smaller companies rose to record highs after erasing their early losses.
Most stock indexes recovered only partially from an opening slide that came as interest rates shot higher again in the bond market after hitting a 1 1/2-year low Tuesday.
Bonds rebounded in the afternoon after sinking twice early Thursday, once after the German and French central banks boosted lending rates to protect against inflation and again after a report showing more upward pressure on U.S. wages, the dominant force behind inflation.
In the bond market, the benchmark 30-year Treasury bond rose, with the yield edging slightly lower to 6.36% from Wednesday’s close of 6.37%.
Wall Street was anxiously awaiting today’s producer price index report, which will be scrutinized for signs of price pressure. Economists expect that the PPI rose 0.2% in September for both its overall and core measures.
But stocks slowly trimmed their losses following comments by Federal Reserve Board Vice Chairwoman Alice Rivlin that the economy may slow toward the end of the year. The remarks suggested that the central bank would not feel pressured to raise interest rates to keep the economy from overheating.
On the New York Stock Exchange, declining issues outnumbered advancers by a 3-to-2 margin in heavy trading.
The Standard & Poor’s 500-stock list fell 3.22 to 970.62, and the NYSE composite index fell 1.41 to 508.16.
But the Nasdaq composite index rose 4.08 to 1,745.85 for its sixth straight closing record and the Russell 2000 rose 0.89 to 464.55, easily erasing Wednesday’s minuscule loss of 0.12.
Among Thursday’s highlights:
* The Dow’s biggest decliners were Merck, down $2.13 to $100.13; 3M, down $1.50 to $96.50; Alcoa, down $1.13 to $79.06; and American Express, down $1.13 to $83.38.
* Retailers were among the biggest decliners after reporting disappointing September sales. Unusually warm weather in some regions smothered consumer demand for fall clothes and other merchandise. The S&P; general retailers index fell 0.88 to 74.73.
Sears fell 69 cents to $54.19; Wal-Mart Stores fell 63 cents to $35.31; Goody’s Family Clothing slumped $3.38 to $23.75; and TJX slipped 38 cents to $29.75.
But Saks Holdings rose $1.63 to $24 after greater-than-expected September same-store sales.
* Among high-flying technology issues, Excite rose $5.63 to $34.38 after signing 10 electronic-commerce and marketing agreements. Gateway 2000 rose for the second day in a row, up $1.63 to $35.63, amid speculation that the direct seller of personal computers is a takeover target.
* Among individual stocks, Saf-T-Lok rose $2.56 to $3 as President Clinton and eight gun manufacturers announced a plan to install child-proof safety locks on guns.
In currency trading, the prospect of higher interest rates in Europe weighed down the dollar.
The dollar hit a 15-week low below 1.7350 German marks, before ending at 1.7427 marks, down from 1.7487.
Against the Japanese yen, it traded quietly, ending at 121.10 yen, compared with 121.05.
Overseas, Tokyo’s Nikkei stock average fell 1.4%, Frankfurt’s DAX index fell 2.1% and London’s FTSE-100 fell 0.8%.
Market Roundup, D8
