U.S. Stocks Fall on Doubts Over Japan’s Plans
Stocks were mostly lower as the dollar rebounded against the yen Thursday, amid concerns that Japan’s plans to revitalize its banking system and economy won’t go far enough.
Meanwhile, bond yields edged lower on signs that the U.S. economy’s runaway growth is slowing.
Also weighing down stocks was a bout of profit-taking ahead of the long holiday weekend. All U.S. markets will be closed today in observance of Independence Day.
The Dow Jones industrial average ended off 23.41 points, or 0.3%, at 9,025.26. The blue-chip index still gained 80.72 points for the week.
The technology-laden Nasdaq composite index suffered most among the main stock indexes, shedding 20.46 points, or 1.1%, to close at 1,894. The index was up 24.47 points from last Friday.
Profit-taking was inevitable, especially in technology stocks, after their recent run-up, analysts said. But stocks are poised to make further gains, some argue.
“The market is in summer rally mode,” said Richard Cripps, chief market strategist at Legg Mason Wood Walker. “The path of least resistance is higher.”
On Thursday, though, losers topped winners by 22 to 18 on Nasdaq, and winners had only a modest edge on the New York Stock Exchange.
The S&P; 500 fell 2.14 points to 1,146.42, the NYSE composite index rose 0.20 point to 585.80, and the Russell 2,000 index of smaller companies fell 1.51 points to 458.31.
In currency trading the dollar rose 2.92 yen to 140.99 yen, ending a two-day sell-off, after Japan added no new measures to its widely touted package of reforms to tackle an estimated $600 billion in bad loans.
Most Asian stock markets gained on Thursday. But with the yen’s pullback in U.S. trading most Asian markets were lower early today. The Tokyo market was off 1.1% in early trading, after soaring in recent sessions.
In the U.S. bond market the price of the 30-year bond climbed, lowering its yield to 5.60%, down from 5.62% Wednesday. A spate of U.S. economic news was welcomed by the bond market, with signs that interest rates will hold steady or go lower.
New orders received by U.S. factories weakened by 1.6% in May, the biggest fall in 1 1/2 years. Also the nation’s unemployment rate rose to 4.5% in June from the 28-year low of 4.3% reached in both April and May.
Much of that increase in unemployment resulted from Asia’s economic crisis, with manufacturers that import from and export to Asia cutting back their payrolls. Also, hiring dropped in the auto industry, hurt by the June 5 strike at GM’s stamping plant in Flint, Mich.
Thursday’s stock market losses followed a strong few weeks on Wall Street. The Dow has risen six of the last eight sessions, gaining 314 points. The blue-chip index rose more than 96 points on Wednesday, its first close above 9,000 in three weeks.
Both the S&P; 500 and Nasdaq also are just shy of their all-time highs.
With the market still going strong, many investors chose to take profits Thursday to end the week with gains in their portfolios.
Among Thursday’s highlights:
* Tech stocks got battered. Among the hardest hit were Sun Microsystems, down $2.44 to $42.50; Intel, off $1.94 to $73.25; and Microsoft, down $2.13 at $107.25.
* Semiconductor chip-equipment makers were lower after KLA-Tencor warned of lower expectations because of a slowdown in orders from chip makers.
KLA-Tencor fell $1.75 to $26; Applied Materials dropped 75 cents to $29.69; Lam Research declined $1.38 to $18.06; and Novellus Systems fell $2 to $34.50.
* Among stocks falling on weak earnings warnings, Parametric Technology plunged $8.75 to $16.06, Let’s Talk Cellular fell $7.19 to $5.69 and First Brands dove $4 to $21.94.
* CompUSA, the largest U.S. computer retailer, also warned of bad news on profit. CompUSA said it will report an unexpected loss in the fiscal fourth quarter because of falling personal computer prices and weak demand. CompUSA fell 69 cents to $16.88, bringing its 1998 decline to 46%.
Market Roundup, D6
