Conflicting Data Prompt Some Profit Taking
Stocks were mixed in a listless session Thursday as some investors collected profits for a second straight day amid contradictory economic reports.
Still, most key market indexes are on track to post positive returns for a second consecutive year. Today is the final trading session of 2004.
In other trading Thursday, the dollar continued its descent, losing ground against most major currencies on renewed speculation that foreign demand for U.S. financial assets is waning because of the nation’s huge trade and budget deficits.
Analysts said the dollar also was hurt by a monthly survey of Chicago-area factories that showed a weakening of business activity there -- suggesting the U.S. economy might not be as robust as believed.
That gave traders a fresh excuse to sell the U.S. currency and buy the euro and other rivals. The euro jumped to a record $1.365 from $1.36 on Wednesday, and the dollar fell to 102.97 yen from 103.83.
One year ago, the euro was worth $1.26 and a dollar bought 107 yen.
The results of the Chicago survey also triggered a decline in longer-term Treasury bond yields, analysts said, on speculation that a cooling economy might eventually lead the Federal Reserve to slow the pace of interest rate hikes.
The yield on the benchmark 10-year note fell to 4.25% from 4.32% on Wednesday. The yield now is exactly where it was on Dec. 31, 2003, after rising as high as 4.87% in mid-June.
But the Chicago survey, which showed the region’s factories lost jobs for the first time since July, was contradicted by the latest Labor Department report on first-time claims for jobless benefits nationwide.
That report showed that jobless claims fell by 5,000 to 326,000 last week. Economists had expected an increase.
In the stock market, the day’s news had little effect, with many investors already done with their trading activity for the year.
Volume on the New York Stock Exchange was the lightest for a full-day session this year.
Mild profit taking in blue-chip issues sent the Dow Jones industrial average down 28.89 points, or 0.3%, to 10,800.30.
Among broader indexes, the Standard & Poor’s 500 was up 0.10 point to 1,213.55 and the Nasdaq composite index added 1.34 points to 2,178.34. Those gains were enough to push both indexes to fresh three-year highs.
Four stocks gained for every three that fell on the New York Stock Exchange.
The Dow is up 3.3% this year, the S&P; 500 is up 9.1% and the Nasdaq index is up 8.7%.
Indexes of smaller stocks have scored better returns. The Russell 2,000, which dipped 0.28 point to 653.06 on Thursday, is up 17.3% this year.
Major indexes may have “another 3% or 4% [increase] to go yet in January,” said Russ Koesterich, equity strategist at State Street Corp. in Boston. “After that, you’ll see interest rates rising again, and it could get tougher. But for now, we’re looking pretty good.”
In other market highlights:
* Fannie Mae added 95 cents to $71.33 after selling $5 billion of preferred stock to address regulator’s concern that the mortgage-finance giant was undercapitalized. The money probably will be used to offset massive losses expected as the company restates its earnings in the wake of its recent accounting scandals.
* Steel stocks suffered on media reports that China could become a large-scale steel exporter as internal demand slows, possibly creating a glut on the global market. U.S. Steel shed $2.90 to $50.04, AK Steel Holding slid $1.95 to $13.89 and Oregon Steel Mills tumbled $2.33 to $19.34.
* Alcoa lost 44 cents to $31.45 for the worst performance in the Dow average. The No. 1 aluminum maker may see pressure on its fourth-quarter margins because of higher oil prices and a drop in the dollar, Lehman Bros. analyst Peter Ward said in a report. He cut his fourth-quarter earnings estimate to 42 cents a share from 50 cents.
* Boeing slipped 17 cents to $51.90. Continental Airlines said late Wednesday that it would buy 10 7E7 Dreamliners, becoming the first U.S. carrier to place an order for Boeing’s newest passenger jet. But that news came as China announced that it would limit new airliner purchases in 2005. Continental rose 25 cents to $13.70.
* Crude oil futures fell slightly one day after bombings in Saudi Arabia raised new concerns about terrorism in the oil-rich Middle East. A barrel of light crude settled at $43.45, down 19 cents, in New York trading.
