Retail Surge Boosts Blue Chips as Tech Issues Slump
Blue-chip stocks closed higher Thursday as strong sales at the nation’s largest retailers reminded investors that economic growth isn’t necessarily bad news.
The Dow Jones industrial average rose 85.80 points to close at 10,663.69.
Broader stock indicators were mixed. The Standard & Poor’s 500 index rose 4.73 points to 1,299.54, but the technology-dominated Nasdaq composite fell 29.09 points to close at 2,403.32.
Stock trading has been especially volatile since May 18, when the Federal Reserve warned it would raise interest rates if it determined that inflation is creeping into the booming U.S. economy.
Since that warning, the market has turned on every new sign of inflationary pressures. Continued signs of growth--ordinarily a boon to stocks--have spooked investors who fear higher interest rates will cut into the profits of major U.S. corporations.
On Thursday, however, investors welcomed good news from the nation’s biggest retailers. Most reported stronger-than-expected sales in May, with specialty retailers and discounters leading the sector. Wal-Mart rose $1.13 to close at $45.50, and Gap gained $3.25 to close at $65.88.
Traders remain focused on this morning’s release of the Labor Department’s unemployment data. The wage component of the report was expected to offer a more pointed indication of whether inflation has returned to the U.S. economy.
The market was also expected to be moved by the surprise resignation of Alice Rivlin, the No. 2 official at the Fed. Rivlin announced after the close of the market Thursday that she is stepping down after three years as the Fed’s vice chairman.
The volatile Internet companies that helped Nasdaq stocks rally Wednesday headed lower again. Amazon.com led the decliners, and is now at less than half its value in late April. It fell $7.06 to $105.06.
In the meantime, investors turned to a broad range of stocks.
“It sure looks like rapid sector rotation,” said Tom Madden, chief investment officer for domestic equities at Federated Investors of Pittsburgh. “The market’s tone is better, but there’s no strong conviction for any sector.”
Market indexes held steady after the New York Stock Exchange announced it will not adopt extended trading hours until at least 2000. The board that governs Nasdaq expects to start an extended schedule as soon as September.
Advancing issues outnumbered decliners by a 6-5 margin on the New York Stock Exchange.
The NYSE composite index rose 3.70 points to 624.20, the American Stock Exchange composite index rose 4.71 points to 775.94 and the Russell 2,000 index of smaller companies fell 0.76 point to 435.98.
The benchmark 30-year Treasury yield inched up to 5.94% from 5.93% the day before.
Among the highlights:
* The American Stock Exchange’s 50-share Internet index lost 3.1%, as Net stocks fell en masse. America Online fell $4.38 to $105.75 and Yahoo slipped $7.13 to $135.38.
* Chevron fell 44 cents to $91.56 and Texaco dropped $2.19 to $62.31 after the companies called off merger talks. “There’s a perception that this might be the end of the giant oil merger talks,” said Robert Stovall, president of Stovall/Twenty-First Advisors. “There aren’t many other potential partners for them.”
* Companies as diverse as American Express, up $3.19 to $121.63, Hewlett-Packard, up $1.69 to $91.44, and Johnson & Johnson, up $2 to $93.69, led the Dow stocks.
Overseas, Japan’s Nikkei stock average fell 1.2%. Britain’s FT-SE 100 gained 0.7%, and France’s CAC-40 rose 0.9%.
Market Roundup, C8
