Stocks Continue Slide Ahead of Jobs Report
Stocks sank for a third straight session Thursday as Federal Reserve Chairman Alan Greenspan sidestepped the debate on interest rates in a speech just one day before a key economic report.
Worries about Indonesian social unrest also weighed on markets.
The Dow Jones industrial average fell 77.97 points, or 0.9%, to 8,976.68, and losers topped winners by nearly 2 to 1 on the New York Stock Exchange.
But trading volume was moderate at 592 million shares, below the 700-million-share range of recent weeks.
The Nasdaq composite index lost 21.54 points, or 1.2%, to 1,835.14.
Bonds set the tone for stocks, as yields edged up ahead of today’s April employment report. The 30-year Treasury bond yield ended at 5.95%, up from 5.93% on Wednesday.
The employment report will provide one of the first indications of the U.S. economy’s strength in April. Bond traders have been fretting that the economy is advancing at a pace rapid enough to compel the Fed to tighten credit sooner than later.
In recent weeks, Fed officials have publicly warned about the potential for an interest rate hike to cool the economy.
But Greenspan, addressing an international banking conference in Chicago on Thursday, provided no new clues on that debate. Instead, he spoke about improving world financial regulations to help prevent future Asian-style currency crises.
Meanwhile, Fed Vice Chairwoman Alice Rivlin, who on Wednesday said stock prices are “hard to justify,” on Thursday told students at the University of Chicago that “there is no reason to slow down the economy” just to dampen inflation a bit, and that the central bank would not raise rates simply to corral hot stock prices.
She also said the Fed had not discussed raising margin requirements for stock purchases on credit. The margin requirement now is 50%.
Ongoing riots in economically strapped Indonesia on Thursday helped send stock prices lower across Asia once again, and hurt sentiment in Europe and Latin America as well.
Hong Kong’s market fell 1.4%, while Tokyo shares dropped 0.7% and Singapore’s market lost 1.4%.
Yet despite a fresh plunge in the Indonesian currency, the rupiah, the Indonesian stock market rallied. The main index surged 5.3% to 436.8. But that was the first gain in 10 sessions.
Among Thursday’s highlights:
* Chrysler shares surged $4.69 to $53.50 after it confirmed its blockbuster merger plans with Daimler-Benz. But Daimler’s U.S.-traded shares fell $2.19 to $106.38 after trading as high as $117.38.
Other auto shares were mixed. Ford lost 13 cents to $45.63 and GM fell $1.06 to $66.88, while Fiat’s NYSE-traded shares rose 63 cents to $23.
* Walt Disney dragged the Dow lower, falling $5 to $119.19 after one analyst trimmed earnings estimates.
* Some retail shares continued to advance, helped by reports that consumer spending remains healthy. Dillard Department Stores gained $1.44 to $37.75, Nordstrom rose $1 to $65.25, Woolworth jumped $1.13 to $23, Ann Taylor surged $3.38 to $20 and Talbots leaped $3.94 to $23.38.
But Petsmart fell 56 cents to $11.44. Chief Operating Officer Donna Ecton resigned, the second top executive to leave the pet supply retailer in the last six months.
* In the tech arena, Microsoft tumbled $3 to $83.38 on rising concern about looming antitrust actions against the company. And 3Com slid $2.28 to $32.13 on worries that the company is continuing to fall behind in competition with other computer networkers.
But America Online rose $1.75 to $89.75 after the company’s quarterly earnings handily beat Wall Street estimates.
* Heartport rose 31 cents to $10.19. The maker of heart surgery systems said it plans to cut a third of its 380 employees, scale back manufacturing and take an unspecified charge to cuts costs.
In commodities trading, gold prices slid below $300 an ounce again, falling $1.80 to $298.70, on worries about the new European Central Bank’s commitment to hold gold.
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Market Roundup, D5
