Stocks end mixed as dollar sinks
U.S. stocks closed mostly higher Thursday despite a sinking dollar and another rise in oil prices.
Treasury bond yields fell to fresh 10-month lows on some weak manufacturing data. Gold prices surged.
The Dow Jones industrial average closed off 4.80 points at 12,221.93, surrendering a late-in-the-session rally.
But winners topped losers by about 7 to 4 on the New York Stock Exchange, where volume was swelled by heavy trading in Lucent Technologies as Alcatel completed its acquisition of the telecom equipment firm.
The NYSE composite stock index rose 0.2% to a record high.
The Standard & Poor’s 500 index edged up 1.15 points, or 0.1%, to 1,400.63. The Nasdaq composite fell 0.46 of a point to 2,431.77.
Stocks were buffeted somewhat by conflicting data on the economy.
A government report on consumer income and spending in October was upbeat, suggesting support for the economy.
But the National Assn. of Purchasing Management-Chicago said its index of Midwest manufacturing activity fell to 49.9 in November from 53.5 in October.
It was the first time in 3 1/2 years that the index was below 50, indicating that manufacturing activity was contracting.
That report helped drive the dollar sharply lower, extending a decline that began more than a week ago, on concerns that global investors may become reluctant to invest in a weakening U.S. economy.
The euro surged to a fresh 20-month high of $1.325 from $1.315 on Wednesday, and the British pound rose to a 14-year high of $1.966 from $1.946 on Wednesday.
Peter Schiff, president of Euro Pacific Capital, is bearish on the stock market and contends that Wall Street is treating the weakening dollar too lightly.
“I think there is some concern building internationally,” he said, referring to the state of the U.S. currency. A falling dollar can indicate that foreign investors are liquidating dollar holdings.
Yet Treasury bond yields fell, indicating strong investor demand for the government securities. The 10-year T-note yield ended at 4.46%, down from 4.52% on Wednesday and the lowest since March. Shorter-term bond yields also dropped.
Traders said bond buyers were encouraged by the weak manufacturing report, which could boost the odds that the Federal Reserve would begin cutting short-term interest rates in 2007.
Gold, which often benefits when investors turn negative on the dollar, continued its recent climb. Near-term gold futures in New York rallied $11.40 to $646.90 an ounce.
Crude oil rose for a fourth straight session, with near-term futures gaining 67 cents to $63.13 a barrel in New York trading. Prices rose in part because of talk that Angola might seek to join the Organization of the Petroleum Exporting Countries.
Among the day’s market highlights:
* Energy stocks were mixed as oil prices rose. Exxon Mobil hit a record high for a second straight session, adding 78 cents to $76.81. The stock is up 37% this year.
But Marathon Oil slipped 20 cents to $94.38 and Baker Hughes fell 41 cents to $73.43.
* Among retailers, Abercrombie & Fitch fell $2.15 to $67.44 after posting a 3% decline in November same-store sales rather than the 3% increase Wall Street had been expecting. Gap fell 35 cents to $18.72 after the clothing chain showed a wider-than-expected drop in November same-store sales.
But discount shoe chain DSW jumped $4.59, or 14%, to $38.30 and set a 52-week high after raising its fiscal 2006 forecast beyond what Wall Street had been expecting.
* Home builders’ stocks jumped after Banc of America Securities upgraded a number of the issues. KB Home gained $2.59 to $51.69 and Pulte rallied $2.66 to $33.74.
* Gold mining stocks soared with the metal’s price. Barrick Gold jumped $1.18 to $31.44 and Goldcorp gained $1.87 to $31.17.
* Cardinal Health, which provides healthcare services, rose $2.79 to $64.62 after it announced plans to sell its business that makes and packages medication for pharmaceutical and biotech companies.
* Pfizer rose 42 cents to $27.49 after it raised its full-year profit forecast and said its development pipeline would produce a number of late-stage products in the coming years.
* Brokerage stocks renewed their recent slide as some investors took profits. Merrill Lynch sank $2.17 to $87.43 and Morgan Stanley was down $1.25 to $76.16.
* European stock markets were broadly lower as investors worried that the rising euro would raise prices of exports to the U.S., reducing demand. Germany’s DAX index fell 0.9%; France’s CAC index slid 1%.
* The Mexican market hit a record high, with the IPC index climbing 0.8% to 24,962, reflecting investor optimism the day before conservative President-elect Felipe Calderon’s scheduled inauguration.
Reuters was used in compiling this report.
