Stocks Ease on Profit-Taking; Bond Yields Up
Profit-takers cashed in on the stock market’s latest rally, pushing prices broadly lower Thursday.
Bond yields edged up from three-month lows.
The Dow Jones industrial average slid 127.59 points, or 1.1%, to 11,198.45 after hitting a record high on Wednesday.
The Nasdaq composite also fell 1.1%, and the Standard & Poor’s 500 dropped 1.4%.
Losers topped winners by 18 to 12 on the New York Stock Exchange and by 21 to 17 on Nasdaq.
Profit-taking hit such unrelated sectors as oil, retail, banking, drugs and Internet shares.
“We’ve had a big run from some big names,” said Charles White, portfolio manager at Avatar Associates. “Some of the stocks that have run the farthest are correcting the most.”
In the bond market, the yield on the 30-year Treasury bond rose to 5.9% from 5.85% on Wednesday.
Yields have been falling in recent weeks as investors bet that the Federal Reserve, which raised its benchmark short-term rate from 5% to 5.25% on Tuesday, is finished tightening credit this year.
But some analysts worry that yields could resurge if economic data fail to confirm that activity is indeed slowing in the current quarter.
In currency trading, the dollar gained slightly against the yen but edged lower against the euro after the European Central Bank left interest rates unchanged.
Among Thursday’s highlights:
* Many Internet stocks tumbled after rebounding sharply in recent weeks. Yahoo fell $5.88 to $152.69, Inktomi lost $4.94 to $115.06, America Online slid $2.81 to $100.44 and Homestore.com fell $7 to $43.50.
But DoubleClick jumped $7.81 to $105.94, and CMGI gained $2.38 to $87.31.
* Retail stocks fell one day after Merrill Lynch downgraded a number of them on concern that investors will turn away from traditional retailers in favor of Internet retailers as holiday-season hype approaches. J.C. Penney slid $1.81 to $39.75, and Dayton Hudson lost $1.56 to $61.94.
* Cisco Systems added 31 cents to $68.94 after announcing two major takeover deals. But other tech giants were mixed. Intel fell $2.63 to $81.06, and Dell Computer was off $1.06 to $47.94.
* Energy stocks tumbled even though crude oil prices recovered somewhat after diving on Wednesday. Royal Dutch dropped $2.63 to $61.69 after analyst Steve Turner at HSBC Securities in London cut his rating on the shares to “reduce” from “add.”
* Bank stocks were broadly lower for a second day, led by J.P. Morgan, down $4.38 to $134.88; Bank of America, down $2.25 to $63.88; and Wells Fargo, down $1.31 to $42.56.
* Grand Toys International plunged $6.50 to $16.56 on Nasdaq after the company said it had not yet finalized a deal to make products tied to the Pokemon toy craze. The stock had surged Wednesday on news of the company’s preliminary licensing agreement.
* Forest-products shares gained after a string of analysts’ upgrades. Although wood prices have slumped recently, Merrill Lynch analyst Anna Torma raised Georgia-Pacific to “long-term buy” from “long-term accumulate.” The stock rose $2.50 to $44.
Market Roundup, C6
