Key Indexes Fall as Bond Yields Surge
Stocks gyrated Thursday and ended with a virtual draw between winners and losers, a showing that surprised some analysts in the wake of the latest surge in bond yields.
Key share indexes almost all fell, though not uniformly, as cautionary comments by Federal Reserve Chairman Alan Greenspan triggered a rout in the bond market.
In other trading, gold rose with bond yields, oil prices sank, and the South Korean and Mexican stock markets zoomed.
On Wall Street, the Dow industrials ended off just 8.59 points at 10,946.82.
The Nasdaq composite was hit much harder, dropping 2.5% to 2,472.28.
Meanwhile, Standard & Poor’s index of 600 smaller stocks was essentially unchanged for the day.
The performance disparities indicated that many investors are torn between concern about the highest bond yields in 11 months, and optimism about the strong economy that is pushing rates higher, analysts said.
Greenspan, signaling fresh concern with potential inflationary pressures in the economy, spurred selling in the bond market that drove the yield on the 30-year Treasury bond to 5.79% from 5.70% on Wednesday.
The yield now is the highest since last June 4.
“Nobody wants Treasuries now,” said Mark MacQueen, money manager at Sage Advisory Services in Austin, Texas.
Greenspan also expressed fears that the highflying stock market could reverse, causing consumer spending to dry up.
“The hawkish tone from Greenspan is shaking the trees of growth stocks” in particular, said Tom Galvin, strategist at Donaldson, Lufkin & Jenrette Securities.
America Online slid $10 to $119.75; Charles Schwab dropped $4.13 to $103.38; Biogen slumped $5.63 to $92.63 and Intel fell $4.31 to $59.69.
Bank stocks also were down sharply, with Citigroup off $2.94 to $69.81 and Bank of America down $1.44 to $69.50.
At the same time, many industrial shares gained, reflecting economic optimism. Alcoa surged $3.56 to $63.75, Kimberly-Clark rose $2.06 to $61 and Dupont rose $1.75 to $72.69.
By the end of trading, winners and losers were nearly evenly matched on the New York Stock Exchange and on Nasdaq.
In other trading, buyers continued to pour into key foreign markets, sending the South Korean market up 5.1%, Mexico up 4.3% and Japan up 3.6%.
In commodity markets, near-term gold futures jumped $2.20 to $289.70, a two-month high, keying off Greenspan. But crude oil futures, which have rocketed in recent months, slumped 66 cents to $18.32 a barrel after oil giant Royal Dutch/Shell said oil exporters may lack the discipline to control output, despite recent cuts.
Among Thursday’s highlights:
* Tech stocks took big hits, with Applied Materials off $3.50 to $53.94, Motorola down $1.63 to $78.75 and Micron Technology off $2.69 to $38.44.
* Energy shares were broadly lower. Exxon fell $2.44 to $82.38; Halliburton fell $1.38 to $43.50.
* Among new issues, real estate data firm Comps.com’s disappointing debut worsened. The stock had fallen to $14.25 on Wednesday after going public at $15. On Thursday, it fell to $13.50.
Also in the new-issues market, online brokerage DLJDirect announced a $13-to-$15 range for its upcoming offering.
Market Roundup, C6
Investor Spotlight, C7
