Stocks Ease Despite Reports
The stock market sputtered Wednesday despite more signs of a strengthening economy, while the upbeat news resonated in the bond market and with the dollar.
Wall Street retreated modestly from Tuesday’s levels, which were the highest since spring 2002. The Dow Jones industrials eased 9.93 points, or 0.1%, to 9,803.05.
The Standard & Poor’s 500 index slipped 2.72 points, or 0.3%, to 1,046.76, and the Nasdaq composite was off 4.09 points, or 0.2%, to 1,939.10.
Falling stocks outnumbered winners by 20 to 12 on the New York Stock Exchange and by 19 to 13 on Nasdaq. Trading volume was active.
The market’s strong gains over the last two weeks anticipated a continuing economic rebound and robust third-quarter corporate earnings, many analysts say. That’s why good news may not be enough to drive stocks much higher in the near term, some say.
“The market is going to find it tough to grind out a lot higher for now,” Michael Vogelzang, president of Boston Advisors Inc. in Boston, told Bloomberg News.
The Federal Reserve’s “beige book” report on the economy, released Wednesday, pointed to an acceleration in September. And though the Commerce Department said retail sales dipped 0.2% last month because of weakness in car sales, retail activity for July and August was revised higher.
Meanwhile, many companies are reporting healthy quarterly earnings gains, as expected.
But profit takers were in control for most of the stock market’s session Wednesday.
“I think there’s been a little bit of emotional buying in the last couple of sessions,” said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara. “That tends to result in somewhat of a recoil or a settling down.”
In currency trading, however, the dollar appeared to be stoked by the economic news. It rallied to 109.50 yen from 108.85 on Tuesday, while the euro fell to $1.165 from $1.173.
Treasury bond prices fell, driving the 10-year T-note yield from 4.35% on Tuesday to 4.40% -- the highest since Sept. 8. The yield is nearing the one-year high of 4.60% reached Sept. 2.
But this year’s powerful rally in corporate junk bonds continued, driving the yield on the KDP Investment Advisors index of 100 junk issues to 8% from 8.04% on Tuesday. The yield was at 10.77% at the start of the year.
Among Wednesday’s highlights:
* Harley-Davidson disappointed investors by reporting third-quarter earnings that rose 15% while also issuing a 2004 motorcycle production target that was lower than expected. The shares slid $3.30 to $49.15.
* CarMax plummeted $6.94 to $32.31. The car dealer said earnings in the quarter that ends Nov. 30 would be hurt as higher-than-expected wholesale used-car prices crimp sales and profit.
* Stocks gaining on earnings news included medical device maker St. Jude Medical, up $3.70 to $57.40; truck parts maker Eaton, up 69 cents to $99.59; and kitchen and bathroom fixture producer American Standard, up $3.06 to $90.15.
* Semiconductor stocks were mixed on the heels of Intel’s strong profit report Tuesday. Intel rose 68 cents to $31.76 but National Semiconductor lost $1.25 to $37.61 and PMC-Sierra eased 29 cents to $16.67.
* Home builders’ shares pulled back. KB Home lost $2.40 to $65.60, Lennar slid $3.67 to $83.65 and Ryland Group dropped $2.64 to $82.06.
* Internet-related shares, among the hottest this year, were mostly weaker. Yahoo fell 87 cents to $41.43, Amazon.com lost $1.37 to $58.54 and InfoSpace dropped $2.38 to $22.72.
