Stocks Broadly Lower as T-Bond Yields Rise
A strong January employment report on Friday helped send long-term bond yields to their highest level since early November, triggering another broad decline in stocks.
Wall Street also was under pressure on worries over semiconductor companies’ earnings, amid a deepening price war between Intel and a key rival.
The Dow Jones industrial average eased just 0.26 point to 9,304.24, but that wasn’t representative of the market as a whole. The Dow was buoyed by gains in heavy-industry stocks that might get a lift from the zooming economy.
On the New York Stock Exchange losers outnumbered winners by 18 to 12. Losers had a 24-to-15 margin on Nasdaq.
The Standard & Poor’s 500 index lost 0.7% for the day and 3.1% for the week. The Nasdaq composite slid 1.5% for the day and 5.3% for the week.
In the bond market the 30-year Treasury bond yield jumped to 5.35% from 5.29% on Thursday, rounding out the worst week for bonds in four months. The T-bond was at 5.09% a week ago.
The January employment news “put a scare in the marketplace,” said Mike Mullaney, who oversees more than $1 billion at Boston Partners Asset Management.
Investors fear that the economy could be building such a head of steam that the Federal Reserve will feel compelled to begin tightening credit again soon, to slow things down.
Shorter-term Treasury yields also moved up last week, with the one-year T-bill yield rising from 4.51% to 4.65%.
Analysts said the stock market, which has had the benefit of better-than-expected fourth-quarter earnings reports from many companies, now is showing fear of its traditional nemesis--rising rates.
“The big story is interest rates,” said Jack Regan, head of options trading at Josephthal & Co.
The bond market will face another test next week, when the Treasury auctions $35 billion in new securities.
Among Friday’s highlights:
* Major tech stocks, the market’s stars as recently as Monday, suffered heavy selling, though most ended well above their lows.
Intel, engaged in a vicious new price war with rival Advanced Micro Devices, lost $2.56 to $127.56 in very heavy trading. But the stock traded as low as $122.69.
AMD fell $2.13 to $16.81.
* Among other tech giants, Micron Technology plunged $5.38 to $70.25, IBM lost $3.56 to $166 and Dell slid $1.94 to $100.44.
But Microsoft rose 94 cents to $160 after falling to $154.88.
* Internet stocks were mixed. EBay fell $17.75 to $221.25, America Online dropped $5 to $164 and Amazon.com lost $2.13 to $115.88, but USWeb rose $1.44 to $39.50.
* Online brokerages were slammed by profit-taking after soaring in recent weeks. AmeriTrade plunged $15.25 to $95.50, Siebert Financial sank $8.13 to $35.13 and J.B. Oxford tumbled $4.13 to $11.75.
E-Trade lost $4.56 to $48.94 after another trading outage.
* Friday’s winners included many cyclical industrial names that could benefit from a stronger economy. AlliedSignal soared $3.44 to $43.06, Alcoa gained $2.81 to $89.50, Deere shot up $2.63 to $35 and USX-U.S. Steel leaped $1.56 to $28.25.
Also, energy stocks got a big lift even though crude oil fell below $12 a barrel, as heating oil prices slid to 12 1/2-year lows. Mobil jumped $2.69 to $88.44, Atlantic Richfield gained $2.63 to $62.94 and Unocal rose $1.13 to $31.
* CD Radio tumbled $7.13 to $25. The company will have to raise an additional $175 million before its satellite-to-car, digital radio network starts broadcasting because of satellite launch delays and added development payments to Lucent Technologies.
* ICN Pharmaceuticals slid $3 to $23.25. The company said the Belgrade government has illegally claimed control of ICN’s troubled Yugoslavian unit.
In Asia, Tokyo’s Nikkei-225 stock index fell 1.3% as 10-year government bond yields rose to a fresh 18-month high of 2.45%, amid fears of heavy government borrowing ahead.
Market Roundup, C4
