Dow Slips but Europe Gains on Rate Decision
Stocks turned lower again Thursday, unable to sustain Wednesday’s rally.
In Europe, meanwhile, shares rallied after the European Central Bank decided against raising short-term interest rates. But, like the U.S. Federal Reserve, the ECB is believed to be leaning toward a rate hike sooner than later.
On Wall Street, the Dow Jones industrials slid 51.29 points to 10,537.05 after surging 187.75 points Wednesday.
The Nasdaq composite rallied to within a point of its record closing high of 2,887.06 reached Sept. 10, then pulled back.
It ended with a gain of just 3.49 points at 2,860.70--helped by Internet stocks.
The broad market was lower. Losers topped winners by 17 to 12 on the New York Stock Exchange and by 10 to 9 on Nasdaq.
Some analysts cited concerns ahead of the government’s report today on labor market trends in September. A strong gain in employment could raise new fears about the Fed’s plans for rates.
The Fed met Tuesday and left short-term rates unchanged, but it adopted a “bias” toward raising them.
Still, the bond market didn’t move much Thursday, suggesting a lack of concern about the labor report. The 30-year Treasury bond yield inched up to 6.18% from 6.17% on Wednesday.
In Europe, the region’s central bank met and left its benchmark short-term rate at a record-low 2.5%--opting to allow the Continent’s blossoming economic recovery to continue.
But analysts said the ECB will probably raise rates later this year or early next.
“Economic recovery is gaining momentum,” said Goldman, Sachs & Co. economist Thomas Mayer, who expects to see an ECB rate increase in early 2000.
On Thursday, most European stock markets rallied after the ECB met. French shares rose 1.1%, the German market gained 1.2% and the British market rose 1.7%.
In U.S. commodity trading, oil fell more than 3% to a one-month low of $22.45 a barrel on signs that some major producers are pumping more than they pledged to in an output-cutting pact that had sparked a rally to a two-year high. OPEC produced 0.7% more oil in September than in August, Bloomberg News estimated.
Among Thursday’s highlights:
* Yahoo surged $14.50 to $190.25 after the Internet directory firm late Wednesday reported quarterly earnings well above expectations.
Among other Net firms, Amazon.com gained $4.88 to $87.31, CMGI surged $7.94 to $113.63 and UBid jumped $7.94 to $40.56. But About.com continued to tumble, losing $6.25 to $47.63 after it announced plans to issue more shares.
* Major tech stocks fell despite the Internet rally. IBM lost $2.81 to $116.38 and Micron Technology dived $7.13 to $69.63. Also, BMC Software sank $6.38 to $63.63 after saying quarterly earnings would fall short of estimates.
* Premier Parks rose $2.88 to $30.44 after signing a foreign theme park deal with Time Warner.
* Energy stocks fell with oil prices. Royal Dutch slid $1.25 to $59.13, Texaco shed $1.06 to $60.94 and Chevron lost $1.81 to $85.81.
* Global Crossing gained $3.69 to $32.19 amid speculation BellSouth may seek to acquire it after losing in the bidding for Sprint.
* Among new stock issues, software maker Calico Commerce (ticker symbol: CLIC) catapulted $42 to $56 and online drug retailer PlanetRx.com (PLRX) zoomed $10 to $26.
Market Roundup, C7
