Dow Hits New High; Broad Market Slides as Yields Rise
Major stock indexes gained more ground on Wednesday, but most stocks closed lower as bond yields rose again.
After trading in a narrow range for much of the session, the Dow Jones industrial average closed up 52.24 points at 11,187.36. That topped its previous record of 11,139.24, set Friday.
The Standard & Poor’s 500 and Nasdaq composite index also set records, posting modest gains after shifting in and out of positive territory throughout the session.
But losers topped winners by 17 to 13 on the New York Stock Exchange and by 21 to 18 on Nasdaq.
Some analysts believe that last week’s 586.68-point gain in the Dow may have left little room to extend the long run of U.S. equities.
“All expectations are for very strong earnings this quarter,” said Gary Campbell, chief investment officer at Commerce Funds in St. Louis. “But that won’t result in major gains. It can’t.”
“The good news is pretty much fully discounted” in stock prices, said David Mead, chief investment officer at Harris Bank in Chicago. “From here on out, I don’t expect much from the stock market except for more volatility.”
On Wednesday, some investors may have been surprised by a rash of earnings warnings by some key companies.
Rising bond yields also weighed on stocks. The yield on the 30-year Treasury bond rose to 6.05% from 6.03% Tuesday.
The Treasury sold new 10-year inflation-indexed notes on Wednesday at a yield of 4.04%. Demand was well below what it was at the last such 10-year note sale in January--despite greater concerns in recent months about inflation.
Bond yields in general are facing upward pressure amid a glut of new corporate bond offerings, analysts said.
In commodities trading, gold inched up after diving Tuesday, when Britain sold off 25 tons of gold.
Among the day’s highlights:
* Alcoa fell $2.38 to $61.38 despite reporting quarterly earnings up 16%, exceeding expectations.
* Philip Morris slumped $2.63 to $37.88 after a Miami jury decided U.S. tobacco companies are responsible for the death and disease of smokers and could face claims by hundreds of thousands of Florida residents seeking billions in damages. R.J. Reynolds Tobacco Holdings fell $1.19 to $30.88 and Loews fell 81 cents to $79.06.
* Away from the choppy trading of most market indexes, the initial public offering of Musicmaker.com (ticker symbol: HITS) benefited from renewed interest in new Internet stocks. Shares of the company, which lets customers create customized compact discs, were priced at $14 and jumped to $23.94.
* Cox Communications rose $1.88 to $38.44 after saying it will swap the $2.9 billion in AT&T; stock it holds for AT&T; cable-television systems with 495,000 customers. Cox said it also will receive $750 million in “other consideration, including cash.”
* Elan’s U.S.-traded shares fell $1.25 to $28.50 after the Securities and Exchange Commission raised questions about its accounting practices in a letter sent to the company in January. Elan, an Irish pharmaceutical company, said it has resolved most issues raised by the SEC.
* Metricom surged $7.63 to $42.75 as the company said several brokerage firms may soon begin coverage of the stock. Last month, MCI WorldCom and Vulcan each agreed to spend $300 million to fund Metricom’s wireless modem service.
* Brass Eagle dropped $3.25 to $15.75. The maker of products for paint-ball games expects second-quarter earnings of 37 cents a share, meeting analysts’ expectations. Revenue, however, is expected to drop to $17.4 million, compared with $19.5 million in the year-ago quarter.
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Market Roundup, C7
