Big-Name Issues Trip on Interest Rate Fears
Stocks were mixed in slow trading Friday, as investors, worried about the effect rising interest rates could have on big-name stocks, continued to move money into small-cap issues.
Meanwhile, Latin American markets fell on fears that Argentina may devalue its currency.
On Wall Street, the Dow Jones industrial average fell 37.46 points to 10,829.28, boosting its loss for the week to 84.04 points, or 0.8%.
But small-stock indexes gained. The Standard & Poor’s index of 600 smaller shares jumped 0.6% on Friday and 2.3% for the week.
In the absence of news, bonds rallied on Friday, driving yields lower. The 30-year Treasury bond yield dropped to 5.76% from 5.83% on Thursday and from 5.91% a week earlier.
Some bond investors said the recent surge in yields on inflation worries has been overblown.
“It’s a good buying opportunity,” said Ken Anderson, head of fixed income at Evergreen Asset Management Corp. in Purchase, N.Y.
But bigger stocks couldn’t get a lift from bonds’ rally on Friday, a bad sign for those issues, some experts said.
The Nasdaq composite index fell 22.09 points, or 0.9%, to 2,520.14 as major tech stocks slumped again.
Microsoft fell 88 cents to $77.56 and Dell lost 94 cents to $37.31.
Tony Cecin, director of institutional trading at Piper Jaffray in Minneapolis, said investors appeared to be seeking value in smaller companies.
“Some of the money coming out of the large-cap stocks is just looking for a new home,” he said.
Friday was a “double witching” day, when the expiration of stock and index options forces traders to adjust their portfolios. Yet volume remained low on the NYSE.
In foreign trading, Argentine stocks and bonds dove as investors moved into cash. Concern Argentina might devalue its peso caused investors across the region to seek safety in U.S. dollars.
Argentina’s Merval stock index dropped 4.3%, Brazil’s Bovespa index fell 3% and Mexico’s main index slid 2.8%.
Concern was fueled by a CNBC report that financier George Soros said Argentina’s peso was overvalued and that the peso’s one-to-one peg to the U.S. dollar is the cause of the country’s recession. Argentina’s Economy Ministry declined to comment.
Among U.S. market highlights:
* Oil stocks rallied amid a rise in crude prices. Exxon gained $2.75 to $82.75, Unocal added 69 cents to $41.88 and Texaco climbed $1.75 to $66.13.
* Cosmetics maker Revlon, a frequent topic of takeover speculation, rose $1.25 to $30.50 amid rumors it will be acquired by fragrance company Coty.
* Merck, counting on a boost after the Food and Drug Administration approved its pain pill Vioxx, instead saw shares slide 94 cents to $71.31. Analysts said Merck simply mirrored the drug sector, where most companies fell more steeply.
Pfizer fell $2.50 to $110.25 and Lilly lost $2.56 to $71.31.
* General Motors surged $3.19 to $83.31, following the lead of Delphi Automotive, the auto parts unit GM spun off. Delphi climbed 81 cents to $21.31 in heavy trading after Standard & Poor’s said it will be added to the S&P; 500.
* Eastman Kodak fell $2.56 to $73 after an analyst said it will keep losing market share to Fuji Photo Film.
* Hauppauge Digital catapulted $15.31 to $27.81 after the company said it will launch a personal computer-based, electronic commerce TV service within weeks.
Market Roundup, C4
