Rising-Rate Worries Push Stocks Lower
Stocks were broadly lower Monday in a lackluster session dominated by continued worries about interest rates.
The market was indecisive for much of the day, with the major indexes fluctuating in and out of positive territory. Prices turned lower near the close as short-term traders stepped away, analysts said.
The Dow Jones industrial average lost 28.11 points, or 0.3%, to 10,444.73 after rising the three previous sessions.
The Standard & Poor’s 500 index was off 5.07 points, or 0.4%, to 1,135.53, while the tech-dominated Nasdaq composite index fell 13 points, or 0.6%, to 2,036.77.
Falling stocks outnumbered winners by 7 to 4 on the New York Stock Exchange and by about 3 to 2 on Nasdaq. Trading was relatively thin.
Wall Street has been preoccupied with rising interest rates for the last few weeks amid strong economic data and comments by Federal Reserve Chairman Alan Greenspan that the central bank would be forced to raise interest rates eventually.
At the same time, robust first-quarter corporate earnings reports have provided a solid underpinning for share prices, analysts said.
“We’re having a great year on the earnings front,” Richard Jandrain, chief investment officer at Banc One Investment Advisors, told Bloomberg News.
Through Friday, for companies in the S&P; 500 index that have reported their first-quarter results, the total earnings gain was 26% from a year earlier, according to Thomson First Call.
Bolstered by profit reports, the Dow index is up 0.8% since March 31 -- even though the yield on the benchmark 10-year Treasury note has surged from 3.84% to 4.43% in that period. Typically, rising rates hurt stocks.
On Monday, bond yields were mostly flat. The 10-year T-note was down from a six-month high of 4.46% on Friday.
The bond market shook off the Commerce Department’s report Monday that new-home sales jumped 8.9% in March, the largest monthly increase in nine months. That could give the Fed more of a reason to tighten credit sooner rather than later, some analysts said.
Tim Connors, chief investment officer for value equities at Delaware Investments in Philadelphia, said he wouldn’t be surprised to see the stock market move sideways for some time.
“It could be a case where the broad market doesn’t do a lot, but that some sectors do better or more poorly,” Connors said.
In other trading on Monday, platinum fell to near a three-month low as some investors took profits. Near-term platinum futures in New York slid $25.60 to $838.90 an ounce. The price was $935 on April 12.
Other commodity prices also have pulled back recently after surging for much of the last year. The CRB/Reuters index of 17 major commodity futures is down 4.8% from a 23-year high reached March 22.
But oil prices rose Monday amid nervousness after the attacks on Iraq’s Basra oil terminal. Near-term crude futures in New York were up 51 cents to $36.97 a barrel.
Among Monday’s highlights:
* Biotech stocks rallied on news that a new drug co-developed by Genentech and OSI Pharmaceuticals was effective against some forms of lung cancer. Genentech jumped $13.77 to $131.99, and OSI rocketed $52.96 to $91.10.
Other winners included Seattle Genetics, up $1.29 to $9.32; Gilead Sciences, up $1.43 to $61.55; Regeneron, up $1.71 to $15.30; and Vaxgen, up $1.29 to $13.79.
* Energy company TXU surged $3.90 to $33.53 after it said it would sell various businesses, including its Texas gas utility, for more than $4 billion.
* Semiconductor-related stocks weakened. International Rectifier lost $1.45 to $44.72, National Semiconductor dropped $2.32 to $43.89, and KLAC Tencor fell $1.43 to $45.16.
* Walt Disney fell 27 cents to $24.38, its lowest closing price since Comcast made an unsolicited stock-swap takeover offer for the company in mid-February. Comcast rose 93 cents to $29.85, making the value of its offer worth $23.28 a share to Disney holders.
