Stocks Mixed Ahead of July Inflation Data
The dog days are here on Wall Street.
Trading slowed to a crawl on Monday as the peak of vacation season took traders away, and as many players in the market awaited an important piece of economic data.
The Dow industrials gained 73.14 points, or 0.7%, to 11,046.79--the first close above 11,000 since July 21--but that was largely due to strength in two technology stocks.
Most indexes were little changed. The Nasdaq composite added 0.3%; the Standard & Poor’s small-cap index eased 0.2%.
The broad market was listless, with losers holding a slight edge over winners on the New York Stock Exchange and on Nasdaq.
NYSE volume was a mere 583 million shares--the slowest day this year.
Some investors were awaiting today’s government report on July consumer inflation. It’s expected to show prices up 0.3%, mainly because of higher energy costs.
Markets breathed a collective sigh of relief on Friday after the July producer-prices report--which measures inflation at the wholesale level--came in lower than expected.
The yield on the bellwether 30-year Treasury bond dove Friday to 6.10% from 6.27% on Thursday.
But on Monday the yield merely edged lower to 6.09%.
The prospect of higher interest rates has pressured stocks in recent weeks as investors have assumed the Federal Reserve Board will raise its key short-term interest rate at least one-quarter point when policy makers meet Aug. 24.
The Fed wants to slow the economy by tightening credit modestly, most experts say.
But fears of an increase larger than one-quarter point may fade further if the inflation report today is favorable. “Recent evidence suggests, and it is our opinion, that there is little reason for the Fed to tighten beyond that amount,” said Mark Keller, chairman of the investment strategy committee at brokerage A.G. Edwards & Sons Inc.
Keller, who on Monday recommended that investors boost their holdings of U.S. stocks to 60% of assets from 55% and cut their cash holdings to 0 from 5%, said the market has begun to absorb the likelihood of one rate increase and is poised to rebound.
Among Monday’s highlights:
* Major tech stocks were in demand, led by IBM, up $4 to $127.38; Hewlett-Packard, up $4.25 to $110.25; Sun Microsystems, up $1.94 to $74.94; Oracle, up 69 cents to $39.31; and Adobe Systems, up $3.06 to $92.
* Some Internet names also surged. EBay jumped $11 to $109, Inktomi gained $7.44 to $117.44 and Broadcom leaped $7.38 to $127.44.
But America Online dipped $1.94 to $94.94 after rallying as high as $98, and Amazon.com added just 88 cents to $98.31 after trading as high as $100.88.
* Thousand Oaks-based Homestore.com soared $13.88 to $40.75. The biggest lister of homes for sale on the Internet rose for a fourth day after signing a marketing agreement with Norwest Mortgage.
* Makers of computer disk drives rallied after a parts distributor said shortages are appearing in some markets. Seagate Technology rose $1.44 to $30.69, Western Digital climbed 63 cents to $4.38 and Maxtor advanced 50 cents to $5.56.
* While few new merger deals hit the market Monday, Alcoa’s bid to acquire Reynolds Metals continued to attract attention on Wall Street. Reynolds Metals slipped 44 cents to $68.94 as the company insisted Alcoa’s efforts to acquire it are not in the best interests of shareholders.
Last week, Reynolds rejected a $5.6-billion offer from Alcoa and said it has been weighing a bid from investment firm Michigan Avenue Partners. Alcoa gained 38 cents to $66.88.
Among other industrial shares on Monday, Illinois Tool Works added 63 cents to $77, Emerson Electric rose $1.06 to $63.56 and Navistar surged $1.75 to $48.
* Among blue chips, Wal-Mart gained $1.19 to $46, GE rose $2.06 to $109.81 and Merck added $1.06. But Coca-Cola eased 44 cents to $59.38.
Overseas, Japan’s Nikkei stock average surged 2.2%. European indexes were mixed, as Germany’s DAX rose 0.7%, Britain’s FTSE-100 was down 0.2% and France’s CAC-40 rose 0.6%.
Market Roundup, C12
