Stocks Mixed Before Employment Report
U.S. stocks closed mixed but mostly higher Thursday, as bond yields rose ahead of today’s January employment report.
Elsewhere, oil prices gained after the White House ordered more troops into the Middle East. Silver continued to surge, while the dollar eased again. In Asia, most stock markets continued to rebound.
On Wall Street the Dow Jones industrial average slipped 12.46 points to 8,117.25 after recovering from a midday deficit of 57 points. Most broader indexes also were down slightly, with the Nasdaq composite off 3.54 points to 1,676.90 after trading above 1,700 for the first time since October.
But winners still topped losers by 16 to 12 on the New York Stock Exchange and by 23 to 20 on Nasdaq--positive breadth that analysts said denoted a fundamentally strong market.
And smaller and mid-sized companies outperformed blue chips for a second straight day. The Russell 2,000 index of small stocks rose 2.22 points, or 0.5%, to 444.06.
“After the huge run we’ve had the last week and a half, it’s a little surprising there hasn’t been more of a profit-taking setback than we’ve had,” said Alfred Kugel, senior investment strategist at SteinRoe & Farnham.
The bond market, however, was more cautious Thursday ahead of the January employment news. The yield on the 30-year Treasury bond rose to 5.93% from 5.86% on Wednesday.
The U.S. unemployment rate, which has been hovering at its lowest level in nearly 25 years, is expected to edge down to 4.6% in January from 4.7% in December.
The monthly report is a closely watched barometer of inflationary pressures on the economy. But some analysts said the report, even if stronger than expected, may not bring about a volatile reaction in markets because inflation concerns have eased in recent months, with East Asia’s economic crisis.
Analysts said Wall Street generally has adopted the view put forth by Federal Reserve Board Chairman Alan Greenspan that Asia’s woes will slow the U.S. economy and take pressure off the tight U.S. labor market. The Fed met earlier this week and left short-term interest rates alone.
Some traders said the bond market was more worried Thursday over unsubstantiated broadcast reports that Starr had agreed to grant the former White House intern, Monica Lewinsky, immunity in return for testimony about her relationship with President Clinton. The reports “bring the political risk factor into play,” said Mike Mullaney at Boston Partners Asset Management.
Meanwhile, oil markets reacted to news that Clinton was sending 2,200 Marines on warships to the Persian Gulf to join the already-large U.S. force near Iraq. Earlier Thursday, a third American aircraft carrier arrived in the area.
At the New York Mercantile Exchange crude oil for March delivery closed 21 cents higher at $16.58 a barrel.
But Mideast tensions didn’t weigh on Asian markets on Thursday, as most continued to rally amid signs that the region’s financial crisis has stabilized.
The Hong Kong market rose 1.4%, while Singapore’s jumped 4.7%, Thailand’s gained 5% and Malaysia’s was up 3.2%. At midday most Asian markets were higher again.
Among Thursday’s highlights:
* GM fell $1.88 to $60 and Ford lost $1.25 to $50.06. Both companies reported January sales that were worse than expected.
* In the tech sector, Intel fell for the first time in four days, losing $1.06 to $86.50, and Micron Technology lost $3.13 to $34.88
But Netscape Communications rallied for a second day on reports that the pioneering software firm is considering selling all or part of itself. The stock rose $2.69 to $21.94 after trading as high as $24. The price has plunged from a peak of $87 in the mid-1990s.
* Retail stocks rallied as companies said sales generally rose more than expected in January. Sears gained $2.13 to $50.25 after reporting that same-store sales--sales at stores open a year or more--rose 5.4%. Talbot’s rose $1.13 to $15.13 on news of a 20% rise in same-store sales.
Among other retailers, Nordstrom rose $2.13 to $53.19, Dayton Hudson rose $1 to $75 and Ross Stores jumped $1.81 to $35.94.
In commodities trading silver rose for a fifth day to its highest in more than nine years amid low inventories and strong demand. Silver for March delivery rose 26 cents, or 3.7%, to $7.28 an ounce on the Comex in New York, highest close since July 22, 1988.
Silver is up 10% in the two days since billionaire Warren Buffett said his company, Berkshire Hathaway, had bought a huge stake. Now makers of jewelry and film are rushing to buy, though many speculators who believe the metal’s price will fall are selling borrowed silver futures, hoping to buy them back later at lower prices.
Market Roundup, D6
