Dow, S&P; Decline; Dollar Slumps
Blue-chip stock indexes pulled back Monday but the broader market continued to advance.
In other trading, the dollar continued to hit multi-year lows against key currencies, and bond yields eased before the Federal Reserve’s meeting today.
On Wall Street, the Dow industrials retreated modestly after Friday’s strong gain. The Dow lost 51.11 points, or 0.6%, ending at 8,531.57, held back by weakness in aerospace giants Boeing and United Technologies.
The Standard & Poor’s 500 index also closed with a small loss, falling 3.53 points, or 0.4%, to 926.55.
But winners still topped losers by 18 to 14 on the New York Stock Exchange and on Nasdaq, in active trading.
Technology stocks continued their recent winning streak, as the Nasdaq composite index eked out a 1.16-point gain to 1,504.04.
The market has been lifted in recent weeks by better-than-expected first-quarter corporate earnings. Also, investors have generally latched onto upbeat economic news and have largely ignored weaker data, apparently betting that the economy will improve in the second half.
The Federal Reserve may have more to say today on the prospects for the economy, but Fed policymakers are expected to leave their key short-term interest rate unchanged at 1.25%.
With U.S. interest rates at 40-year lows, more foreign investors appear to be turning their backs on dollar-denominated investments: The euro, Canadian dollar and Australian dollar all hit new multi-year highs against the U.S. dollar Monday.
The euro ended at $1.128 in New York, up from $1.123 Friday.
“What we’re seeing here is the fundamentals bleeding through” and hurting the dollar, Jason Bonanca, currency analyst at Credit Suisse First Boston in New York, told Bloomberg News. Those fundamentals include low interest rates, rising federal budget deficits and foreigners’ concerns about the longer-term health of the U.S. economy.
Despite the dollar’s weakness, Treasury bond yields declined Monday. The 10-year T-note ended at 3.89%, down from 3.92% on Friday.
The Treasury will auction a record $58 billion in securities this week to pay the government’s bills amid rising deficits. The auction begins today with the sale of $22 billion of three-year notes.
In commodities trading Monday, oil prices rose on speculation that grades of gasoline used in the biggest U.S. cities may be in short supply this summer, when demand peaks, Bloomberg News reported.
The near-term oil futures contract in New York rose 82 cents to $26.49 a barrel.
Among the day’s highlights:
* Boeing fell $1 to $27.62 after saying it is facing a government investigation on possible misuse of competitors’ documents.
Other defense shares also weakened, including United Technologies, down $1.23 to $62.17 and Northrop Grumman fell $1.33 to $88.50.
* HMO stocks were strong after Oxford Health Plans said earnings beat expectations. Oxford jumped $3.55, or 11.7%, to $33.90, Wellpoint Health gained $1.07 to $77.54 and Anthem was up $1.27 to $71.
* Fleetwood Enterprises rose again, gaining 25 cents to $6.43. The Southland-based manufactured-home maker’s shares surged $1.07 Friday, but the company said it wasn’t aware of any reason for the move. Trading in the stock remained heavy.
Market Roundup, C9-10
