Stocks, Bond Yields Decline
Wall Street ended a lackluster session mostly lower Friday after a speech by Federal Reserve Chairman Ben S. Bernanke failed to give investors any hints about interest rate policy despite their concerns that the economy might be slowing too fast. The major indexes finished the week with losses.
The bond market, however, appeared relieved that Bernanke did not send signals that higher interest rates are in the offing. The yield on the 10-year U.S. Treasury note, a benchmark for mortgage rates, fell to a five-month low of 4.78%, down from 4.8% on Thursday.
Bernanke spoke at a conference in Jackson Hole, Wyo. Although most analysts did not believe Bernanke would discuss monetary policy, there was some concern that hawkish remarks by the Chicago Federal Reserve Bank President Michael Moskow on Tuesday signaled that the Fed -- which left rates unchanged this month -- might be priming markets for an interest rate hike next month.
“The market was thinking, to a small degree, that he might come out sounding more like Moskow than less like Moskow,” said Lou Brien, market strategist at DRW Trading in Chicago.
Wall Street took little solace from Bernanke’s silence. The Dow Jones industrial average fell 20.41 points, or 0.2%, to 11,284.05. Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index slipped 0.97 of a point, or 0.07%, to 1,295.09, and the Nasdaq composite rose 3.18 points, or 0.2%, to 2,140.29.
Further exasperating investors was a rally in oil and natural gas prices, which reinforced concerns that consumer spending will weaken. Stocks have retreated this week on questions about whether the economy is heading for a soft landing.
With little to guide them in slow summer trading, investors dwelled on the week’s sluggish housing and durable goods data.
“Without anything from Bernanke, the theme of the week is that there’s now a negative shift in opinion about the economy due to housing data,” said Arthur Hogan, chief market analyst at Jefferies & Co. “Don’t forget volume is light, there’s not that many buyers and sellers out there, and that will push the market in one direction without much effort.”
For the week, the Dow ended down 0.9%, Nasdaq fell 1.1%, and the S&P; 500 dropped 0.6%.
Analysts said investors were waiting to see whether stocks could latch on to a direction next week, when a batch of economic data including consumer confidence, job growth and manufacturing readings will be released. Many on Wall Street won’t get back from vacation until after Labor Day and could begin to digest and trade on those numbers then.
“There’s still a coin toss to how people will respond, but we believe the focus on rates is going to diminish and people will look more at the economic data to see how severe the downturn is going to be,” said Warren West, head trader at Greentree Brokerage Services in Philadelphia. “We’re to stop celebrating a downturn and start to worry it will be more than just a soft landing.”
In other market highlights:
* Crude oil futures rose 15 cents to $72.51 a barrel in New York trading amid fears that a storm brewing in the Caribbean could threaten Gulf of Mexico production sometime next week. Continental Airlines fell 43 cents to $22.96, and American Airlines parent AMR dropped 46 cents to $19.40.
* Retailers in the S&P; 500 fell for a sixth day, the longest losing streak since September, on concerns that higher energy prices will reduce consumer spending. They were the worst-performing group this week among two dozen in the index.
Bed Bath & Beyond, the largest U.S. home-furnishings retailer, slipped 53 cents to $33.01. Nordstrom fell 14 cents to $34.05 and Limited Brands shed 20 cents to $24.78.
* Technology stocks moved moderately higher, with XM Satellite Radio Holdings rising 59 cents to $13.49. The company, whose shares were off nearly 54% from the start of the year, was given regulatory approval for three radio models with FM transmitters.
* SanDisk, which makes removable memory products used in electronics such as digital cameras, was one of Nasdaq’s most heavily traded stocks after an analyst’s upgrade, rising $1.60 to $54.61.
