Late Rally Lifts Blue Chips Despite Rate, Kosovo Woes
U.S. stocks closed mixed Thursday amid a late burst of buying that overcame worries about rising interest rates and the worsening crisis in Kosovo.
On the first day of the second quarter, the Dow industrials rose 46.35 points, or 0.5%, to 9,832.51 in light trading.
Broader indexes also were higher. The Standard & Poor’s 500 gained 0.6% and Nasdaq’s composite was up 1.3%.
Winners barely edged losers on the New York Stock Exchange, while losers were in the majority on Nasdaq.
Stocks traded cautiously for much of the day ahead of the long holiday weekend. Most financial markets are closed today in observance of Good Friday, though the government bond market will be open for a short time.
Bonds had a tough day on Thursday as fresh data pointed to more strength in the U.S. economy. The National Assn. of Purchasing Management reported an unexpected rise in its manufacturing index, to 54.3 in March from 52.4 in February. And the group’s inflation gauge for prices companies paid for supplies posted its biggest monthly increase since 1996.
“There has to be some concern about inflation with the economy being so strong,” said Charles Ullerich, who helps oversee $2 billion of bonds at Pilgrim Funds.
Nervous traders pushed the yield on the bellwether 30-year Treasury bond to 5.67% from 5.62% on Wednesday. The yield now is the highest since March 3.
The bond market today will have to contend with the government’s March employment report, which also could show an accelerating economy.
The Kosovo situation also is weighing more heavily on markets, traders said.
“There’s just a little more caution in the air, and people are going into the long weekend trying to not have a great deal of exposure either on the up or down side,” said Ricky Harrington, analyst at Interstate/Johnson Lane in Charlotte, N.C.
Even so, the continuing boom in corporate mergers is supporting stocks, analysts said.
Yahoo on Thursday announced a $5.7-billion deal for Broadcast.com, sending Yahoo shares up $11.38 to $179.75 and Broadcast.com up $11.81 to $130.
And CBS said it would pay $2.5 billion for King World Productions, the largest TV-syndication company. CBS shares fell 69 cents to $40.13, but King World’s rose 56 cents to $31.13.
Among Thursday’s highlights:
* The Yahoo-Broadcast.com deal spurred a rise in other Internet shares. InterVU, which helps corporate Web sites transmit big video and audio events, soared $15.13 to $59.50. RealNetworks, which makes software that lets users send and receive sound and video over the Net, leaped $35.69 to $157.88.
* Telephone stocks gained after an analyst at Lehman Bros. said strong growth in the data business will compensate for competitive pricing and regulatory impediments. SBC Communications soared $2.56 to $49.75, Ameritech rose $2.63 to $60.25, BellSouth gained $1.19 to $41.25 and Sprint FON jumped $4.25 to $102.38.
* Some industrial issues rose on the economic data. Georgia-Pacific leaped $3.75 to $78, Goodyear was up $2.06 to $51.88 and Union Carbide rose $1.06 to $46.25.
* American Express gained $3.25 to $121, contributing the most to the Dow’s advance, after a Morgan Stanley Dean Witter analyst said earnings at the world’s biggest charge card issuer will rise as it issues more cards overseas.
Many foreign markets started the new quarter with a rally. Tokyo’s Nikkei-225 index surged 3.1% to 16,327 as domestic and foreign investors scooped up shares on what was also the first day of Japan’s new fiscal year.
The German market climbed 0.6%. Hong Kong shares rose 1.2% and South Korea’s jumped 2.9%.
Market Roundup, C6
