Oil Leads Dow Up 5; Bonds Rally
Oil stocks pushed the Dow industrials slightly higher Thursday, but the broad market sagged for a fourth straight day as Wall Street awaited next week’s Federal Reserve interest-rate-policy meeting.
“Any time there is uncertainty, markets are apprehensive,” said Joe Stocke, a senior portfolio manager at Meridian Investment Co. “There is always the question that Iraq could do something to spread the problem to Israel or Saudi Arabia.”
The Dow Jones industrial average rose 5.92 points, or 0.1%, on Thursday to close at 8,829.74. The broader Standard & Poor’s 500 index fell 3.28 points, or 0.3%, to 1,117.69. The technology-heavy Nasdaq composite index fell 11.05 points, or 0.6%, to 1,851.06. And the Russell 2,000 index of smaller stocks fell 1.27 points, or 0.3%, to 392.20.
Declining shares outpaced advancers by a 17-12 ratio on the New York Stock Exchange.
U.S. bond yields fell and the dollar rose as investors sought safety amid rising tension in the Persian Gulf.
The yield on the benchmark 30-year Treasury bond slid to 5.25% from 5.29% on Tuesday. The yield on two-year notes, the most actively traded Treasuries, fell to 4.46% from 4.48% on Tuesday. The bond market was closed on Wednesday for the Veterans Day holiday.
Also helping demand for dollar assets and the dollar itself were doubts that Japan’s latest plan to raise spending and cut taxes will succeed in lifting its economy out of recession.
A stronger dollar boosts the returns foreign investors receive on U.S. assets once the proceeds are converted into their own countries’ currencies.
“There’s always a flight to the dollar whenever there’s the threat of military action,” said Malcolm Gilroy, who oversees $200 million of global bonds at Laketon Investments Management in Toronto.
In late New York trading, the dollar was at 121.98 Japanese yen, from 121.72 on Wednesday.
Among Thursday’s highlights:
* Chevron gained $3.13 to $83, Exxon advanced $2.56 to $72.81 and Mobil climbed $1.81 to $73.63 as crude oil prices rose in response to the latest U.N.-Iraqi standoff.
* EarthWeb shares, powered by continuing enthusiasm for Internet stocks, rocketed $20.56, or 42%, to $69.25 on the second day of trading for the online provider of technical information for Web site designers. “Guys are sitting at home in front of their computer on E-Trade buying Web stocks,” said Needham & Co. analyst Dalton Chandler.
Others making sizable advances were EBay, up $10.06 to $126; Yahoo, gaining $8.25 to $173.25; and Lycos, soaring $4.25 to $53.06.
* Computer stocks stumbled, however. Dell Computer dropped $2.75 to $69.19 a day after rival Compaq Computer Corp. said it too will sell computers directly to customers. Compaq fell 63 cents to $33.88.
* Sears and Wal-Mart Stores led Dow decliners on concern that next year won’t see the strong retail sales this year has. Sears fell $1.13 to $44.50, and Wal-Mart fell $1 to $68.75.
* Danaher rose $2.38 to $42.75 after Standard & Poor’s announced that the toolmaking company will be added to the S&P; 500 index on Tuesday, replacing Stone Container, which is being acquired by Jefferson Smurfit. The stock of a company about to be added to the S&P; 500 will often jump because mutual funds that track the index must buy the stock.
Overseas, Japan’s Nikkei stock average fell 2.4%, Germany’s DAX index fell 1.6% and Britain’s FTSE-100 fell 0.1%.
Market Roundup, C6
