Stocks Finish Mixed Ahead of Jobs Report
The U.S. stock market ended mixed but mostly higher Thursday in a relatively calm session, as traders awaited today’s August employment data.
Meanwhile, Asian markets also were mixed, and some traders sensed that at least a short-term bottom may have been reached in those battered stocks.
On Wall Street, the blue-chip Dow Jones industrials dipped 27.40 points to 7,867.24, weighed down by losses in Caterpillar.
But rising stocks topped losers by 15 to 13 on the New York Stock Exchange and by 22 to 19 on the Nasdaq market.
And the Russell 2,000 index of smaller stocks rose 0.92 point to 429.71, its sixth consecutive record high and its ninth straight winning session.
The continued focus on smaller and mid-size companies also bolstered the technology-heavy Nasdaq market. The Nasdaq composite index advanced 6.39 points to 1,624.63.
“There’s a lot less than meets the eye today. The market looks a whole lot better than the Dow,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter.
“You’ve had a couple of good days, considering the strength of the move Tuesday,” he said, referring to a rally that boosted the Dow a record 257 points. “You might have expected a bigger round of profit-taking.”
There was little response in the bond market to Thursday’s generally upbeat reports on August sales at the nation’s big retail chains. There also was limited reaction to a report showing that orders to U.S. factories rose a slightly bigger-than-expected 0.2% to a record level in July.
Continuing signs of strength in the economy could fuel concerns about another interest rate hike by the Federal Reserve Board.
But the bond market was placid Thursday, with the yield on the benchmark 30-year Treasury bond holding steady at 6.60%. The yield on two-year T-notes inched up to 5.98% from 5.96% on Wednesday.
*
Traders appeared to be waiting for today’s government report on August employment trends.
“The employment number may set the tone” for bond yields over the next several weeks, said John Kohn, who oversees $12 billion in bonds for NationsBank’s TradeStreet Investment Advisors unit in Charlotte, N.C. “The economy is still stronger than most people believe.”
In the stock market, analysts said the most encouraging trend of recent weeks has been the persistent strength in smaller stocks, even as blue chips have bounced wildly.
Smaller companies, which tend to be more dependent on the domestic economy than on foreign business, may have an earnings growth advantage over blue-chip multinational companies if the dollar stays strong (hampering multinationals’ foreign earnings) and if the U.S. economy remains healthy while growth slows in Asia.
Indeed, the decline in Caterpillar and some other blue-chip stocks on Thursday was tied at least in part to worries about Asia’s problems, as growth is expected to slow in that region in the wake of recent deep currency devaluations.
“People are concerned about how the dollar will impact business in Europe, and with the Asia currency situation, they are more and more interested in domestic plays,” said Tom Galvin, chief stock strategist at Deutsche Morgan Grenfell. “That helps small- and mid-cap stocks.”
Among Thursday’s highlights:
* Caterpillar fell $3.44 to $56.38 after Smith Barney analyst Tobias Levkovich downgraded it to “neutral” from “buy,” based on the “turmoil in Asia” and the dollar’s strength. Other industrial multinationals losing ground included Fluor, down $1.44 to $56.31; Goodyear, down $1 to $61.75; and Boeing, down $1.19 to $56.25.
* Upbeat August retail sales reports helped boost Dayton Hudson $1.50 to $61.50, J.C. Penney $1.75 to $62.50, Limited 81 cents to $24.81 and Pacific Sunwear $5.25 to $44.63.
But AnnTaylor Stores tumbled $1.94 to $14.94 after reporting that its sales were off 22%.
* In the tech sector, Advanced Micro Devices sank $3.63 to $35.25 after warning of a third-quarter loss because of production snafus in its K6 microprocessors. That news helped rival chip maker Intel gain 81 cents to $94.63.
Elsewhere in the sector, National Semiconductor jumped $3.63 to $40.94 and Cabletron Systems rose $2.31 to $32.38.
* California savings and loan stocks were sharply higher after a judge said Golden State Bancorp’s Glendale Federal unit has a strong case in an accounting rules dispute with the federal government. (Story, D2.) Golden State rose $1 to $30.13, Coast Savings surged $2.38 to $49.88 and H.F. Ahmanson jumped $1.94 to $53.81.
* Broker Quick & Reilly gained $2.25 to $36.81 on expectations that it will soon get a takeover offer.
In Asian markets, Singapore’s key stock index edged up, and shares also gained in Indonesia and the Philippines. But Malaysian shares sank again, although in early trading today they were up powerfully after the government said it would lift recent trading restrictions put on to dampen volatility.
In Taiwan, stocks took their biggest dive in almost four months Thursday, with the main index dropping 3.3%, as doubt grew that the island’s stock market can withstand the slide in other regional equity markets.
*
Market Roundup, D6
