Stocks Mixed as Interest Rate Fears Increase
Stocks zigzagged to a mixed finish on thin volume Thursday and bond yields rose after a report of slowing productivity stoked fears of a significant interest rate hike by the Federal Reserve this month.
Blue-chip stocks declined, with the Dow Jones industrial average easing 67.64 points, or 0.7%, to 10,412.49, and the Standard & Poor’s 500 dipping 5.72 points, or 0.4%, to 1,409.38. But the technology-oriented Nasdaq composite index gained 12.93 points, or 0.4%, to 3,720.24.
Advancing issues outnumbered decliners by a 5-4 ratio on the New York Stock Exchange.
Treasuries weakened for the fourth straight day. The 30-year bond yield rose to 6.16% from 6.11% on Wednesday.
Still, analysts said Thursday’s productivity report probably will not sway the Fed.
Most Wall Street traders opted to wait for the Labor Department’s April employment report, due today, before making any big moves.
Signs of escalating wage pressures in that report could spark major selling, although modest wage growth could enable stocks to close out the week with a rally.
Billionaire financier George Soros delivered a downbeat assessment of the U.S. stock market Thursday. Last week, Soros reshuffled his hedge fund company, saying he would convert his popular Quantum Fund to a vehicle with less risks, but also less potential for vast rewards.
“We probably are in a bear market, only we don’t know it yet,” Soros told a group of journalists at the Assn. of American Correspondents in London. Soros added that U.S. markets could be at risk because many brokers and traders are not old enough to remember the last time the economy suffered a severe downturn and prolonged recession.
Financial stocks, which are highly sensitive to interest rate changes, recovered some ground after tumbling broadly Wednesday. American Express rose $2.75 to $144.75.
But most blue-chip stocks were lower. AT&T; fell $1.13 to $38.69, General Electric slid $2.06 to $154 and McDonald’s dropped $1.56 to $35.75.
Among other equity highlights:
* A day after Goldman Sachs removed several retail stocks from its recommended list, many of the nation’s largest retailers reported that April sales didn’t meet expectations. Wal-Mart fell $2.44 to $51.38 and Gap dipped 75 cents to $36.
Intimate Brands gained $2.69 to $41.63 after the retailer was raised to “strong buy” at Chase H&Q.;
* Plug Power plunged $21.88 to $59.44 after saying its fuel cells don’t meet the specifications of joint-venture partner GE.
* On the earnings front, Ames Department Stores declined $4.44 to $11.13 after warning of a wider-than-expected loss. A warning also clipped Linux company EOn Communications, down $3.06 to $6.25.
Kendle International, which does research for drug and biotechnology companies, fell $2.50 to $8.25 after reporting a profit shortfall.
* But AnnTaylor Stores gained $3.38 to $22.88 after beating profit expectations. Strong earnings also boosted insurance brokerage Aon, up $3.13 to $29.38; biotech company Chiron, up $1.44 to $36; and broadcasting company Westwood One, up $5.19 to $36.
Jupiter Communications rose $2.50 to $28.38 after the Internet research firm said it had a break-even first quarter rather than the expected loss.
And Talbots rose $6.38 to $48.75 after the clothing retailer raised profit forecasts for its latest quarter.
* Major technology stocks were mixed. Dell Computer fell $2.06 to $47.25, but Applied Materials rose $3.25 to $97.75 as the chip equipment maker said sales in Singapore and Malaysia will more than double in the next year, and software maker Echelon rallied $3.25 to $34.75 on a marketing alliance with Sun Microsystems.
* Among Southern California companies, San Diego-based Hollis-Eden Pharmaceuticals slipped $1.19 to $10.06.
Market Roundup, C7-8
