Stocks Mixed; Yields Climb on Home Sales Data
The Dow Jones industrial average notched a fifth straight record high Tuesday, but stocks were mixed overall as interest rates rose again on budding inflation concerns.
The Dow erased an early 41-point loss and rose 34.38 points to 8,584.83, pushing the rally from January’s low to more than 1,000 points.
The Standard & Poor’s 500 index wiped out Monday’s small loss to set its fourth record in five sessions, but the Nasdaq composite finished slightly lower as bellwether technology issues gave back some of February’s big gains for the second day in a row.
Yields rose sharply again in the bond market amid news that sales of new homes soared 10.3% in January, the biggest increase in more than four years.
Much like Monday’s healthy reading on factory activity, the data suggest that the Asian fiscal crisis may not slow a resilient U.S. economy enough to keep inflationary pressures in check.
Stock investors, however, saw a potential boost for company profits that might be hurt by the Asian slowdown. Strong home sales can ripple through the economy by boosting demand for building supplies and home furnishings.
“It’s the demand side of the equation--the earnings side, the revenues side--that investors were looking at here,” said A.C. Moore, chief investment strategist for Principal Financial Securities of Dallas, cautioning that rising bond yields are making fixed-income investments more attractive as stocks reach pricey levels.
As bond prices slid Tuesday, the yield on the 30-year Treasury bond--which on Monday closed above 6% for the first time since mid-December--rose to 6.07%. Bond yields are used to calculate the interest charged on many long-term loans for consumers and businesses.
On the New York Stock Exchange, advancing issues outnumbered decliners by a 9-8 margin, but decliners held the lead in Nasdaq trading.
The S&P; 500 rose 4.32 points to 1,052.02, topping Friday’s record of 1,049.34, and the NYSE composite index rose 2.26 points to 546.89, its fifth straight closing high.
The Nasdaq composite index slipped just 1.40 points to 1,757.14 despite a second day of sharp losses in computer and chip stocks.
The Russell 2,000 index of smaller companies rose 0.88 point to 462.42, but the small-company-dominated American Stock Exchange composite index fell 1.27 points to 708.97.
Overseas, Tokyo’s Nikkei average fell 0.6%, Frankfurt’s DAX index rose 0.4% and London’s FTSE-100 fell 0.2%.
Among the market highlights:
* Airline stocks rose amid lower oil prices and an upbeat view of US Airways Group by Merrill Lynch & Co. Analyst Candace Browning said the carrier dominates East Coast cities, making it strategically attractive to either AMR or UAL. US Airways soared $4.56 to $68.06. AMR, parent of American Airlines rose $4.56 to $136.56, and UAL, parent of United Airlines, gained $4 to $87.25.
Continental Airlines rose $1.56 to $52.06 after the company said it will repurchase as much as $100 million of its common stock.
* Shares of the top PC makers, including Compaq Computer and Dell Computer, fell amid concern that price competition was extremely aggressive in January. Compaq lost $1.31 to $29.41 and Dell dropped $4.50 to $131.13.
* Intel fell $2.31 to $85.31 on concerns about slowing demand and falling prices in the semiconductor industry. Texas Instruments fell $2.44 to $53.06.
* Amazon.com fell for a second day, by $4.50 to $71.75, amid speculation that the online bookseller may generate scant profit despite rapid growth, as large retailers also begin selling books on the World Wide Web.
Market Roundup, D9
