Blue Chips Ease as Yields Jump; Big Techs Gain
A late rally in big-name technology shares saved the Nasdaq composite index from another down day on Wednesday, but the broad market ended lower.
For blue chips, another rise in bond yields took its toll.
The Dow Jones industrials fell 21.73 points to 9,275.88, though the index pulled up from an 86-point loss.
The Dow has fallen in six of the last eight sessions, as bond yields have surged amid continuing signs of a robust U.S. economy.
On Wednesday the 30-year Treasury bond yield jumped to 5.69% from 5.61% on Tuesday, and now is the highest since July 31.
The bond market reacted partly to reports of robust car sales in February.
“The worst is not over” for bonds, said Eric Cheung, who oversees $2.8 billion at Wilmington Trust in Wilmington, Del. “There’s no question about it--it all comes back to the economy.”
Corporate bond offerings also drew demand away from Treasuries, traders said. Fannie Mae, the largest provider of U.S. home mortgage funding, sold $3 billion of three-year notes.
What a contrast between the U.S. bond market and the Japanese market, where early today bond yields fell to two-month lows as the Bank of Japan--after pushing the overnight lending rate close to zero on Wednesday--said it is considering lowering other short-term rates such as yields on certificates of deposit.
That helped drive the dollar higher versus the yen. The dollar closed at 121.77 yen in New York, up from 120.23 on Tuesday.
On Wall Street, meanwhile, stock investors can’t ignore rising U.S. interest rates, experts said.
“The market is coming down for variety of reasons: overvaluations and higher interest rates,” said Stanley Nabi, chief investment officer at DLJ Investment Management.
Separately, legendary investor Warren Buffett said on ABC News on Tuesday that the stock market was in a “dangerous” period after its sharp gains of recent years.
In the technology sector, computer networker 3Com shares fell for a second day, following its warning Tuesday that results for the quarter just ended will be below expectations. 3Com shares slid $2.44 to $24.56 on Wednesday.
But other beaten-down tech shares gained late Wednesday, lifting the Nasdaq index 6.17 points, or 0.3%, to 2,265.20.
Still, losers outnumbered winners by a 23 to 15 margin on Nasdaq and by 16 to 13 on the New York Stock Exchange.
Among Wednesday’s highlights:
* Tech names closing higher included Intel, up $4.88 to $114.69; Dell, up $2.88 to $80.94; Compaq, up $1.94 to $33.88; and Texas Instruments, up $5.38 to $91.88.
* In the Internet sector, Cyberian Outpost soared $6.38 to $22.50 after the online computer products retailer said it expects to report an increase in fourth-quarter revenue to $33 million from $8.1 million a year ago.
Also gaining were EBay, up $6.44 to $123.50; Amazon.com, up $2.19 to $123.50; and Verticalnet, up $1.75 to$57.75.
* Monsanto rose $2.25 to $46.63 amid news reports of a possible acquisition by DuPont, whose shares fell $1.06 to $50.25. The companies declined to comment.
* Oil stocks gained as crude oil prices rose to their highest level in two months, at $12.93 a barrel, as an unexpected drop in inventories eased concern that supplies were overwhelming refinery demand.
Chevron leaped $2.31 to $78, Mobil added $1.44 to $81.88, Unocal rose $1 to $29.56 and Texaco rose $1.75 to $47.13.
* Jones Apparel Group tumbled $3.19 to $22.75 after the company agreed to buy footwear and accessories manufacturer Nine West for $885 million. Nine West rose 6 cents to $22.88.
* Circus Circus fell 94 cents to $16.63 as it opened its newest Las Vegas resort, Mandalay Bay.
* Among Southland issues, Modtech Holdings plunged $5.13 to $9.31 after the maker of modular classrooms on Tuesday reported fourth-quarter earnings of 19 cents a share, down from 31 cents a year ago, citing the California legislature’s delay in allocating funds for school construction.
Foreign markets were mixed. The Nikkei-225 index in Tokyo climbed 1.8%, but Germany’s DAX index dropped 2.2% and the CAC-40 index in France gave up 1.1%.
Market Roundup, C10
