Most Stocks End Lower on Rate Worries

U.S. stocks ended mostly lower Thursday, surrendering early gains, as concerns about interest rates kept investors on guard ahead of today’s key report on February employment.

Many foreign markets were higher after a recent wave of selling, although shares in Mexico and Brazil continued to sink.

Wall Street opened with a rally, but it faded after New York Federal Reserve Bank President Timothy Geithner said in a speech that the central bank might need to counter the effects of foreign purchases of U.S. bonds, which have held down long-term interest rates in recent years.

His comments underscored worries about how much more credit-tightening the Fed might do -- particularly with the European Central Bank and the Bank of Japan in the same mode.

The Bank of Japan on Thursday said it would begin to slowly tighten credit as the nation’s economy rebounded.

Anticipation of the Japanese central bank’s shift had helped drive up bond yields in Japan in recent weeks. U.S. and European bond yields also have risen sharply, responding in part to continued signs of strength in the global economy.

Higher interest rates, in turn, have triggered selling in many stock markets around the globe.

On Thursday, the Standard & Poor’s 500 index fell for the fifth time in six sessions, losing 6.24 points, or 0.5%, to 1,272.23.

The technology-heavy Nasdaq composite slid 17.74 points, or 0.8%, to 2,249.72.

The blue-chip Dow Jones industrial average held up better than most broader indexes. It ended with a loss of 33.46 points, or 0.3%, at 10,972.28.

Falling stocks outnumbered winners by about 5 to 4 on the New York Stock Exchange.

“Investors are becoming more concerned about how higher rates will affect consumer spending,” said Steve Neimeth, a fund manager at AIG SunAmerica Asset Management.

An S&P; index of major home builders’ shares dropped 2%, the 10th decline in 11 sessions.

In the Treasury bond market, however, long-term yields were stable for a third day. The 10-year T-note ended at 4.73%, unchanged from Wednesday. The Treasury sold $8 billion of new 10-year notes at a yield of 4.76%, drawing bids for 2.87 times the amount on offer, above the 2.43 average for recent auctions.

Traders said many bond market players were biding their time ahead of today’s employment report. A sharp gain in jobs could add to pressures on the Fed to continue raising short-term interest rates.

Geithner’s comments Thursday also could deepen worries about rates.

Referring to foreign investors’ heavy purchases of Treasury securities in recent years, he said that, “To the extent that these forces act to put downward pressure on interest rates and upward pressure on other asset prices, they would contribute to more expansionary financial conditions.” The Fed, he said, “would have to act to offset these effects in order to achieve the same impact on the future path of demand and inflation.”

In other trading, near-term oil futures in New York edged up 45 cents to $60.47 a barrel after tumbling $1.56 on Wednesday.

Among the day’s highlights:

* In the home building sector, KB Home lost $1.17 to $62.18, Ryland Group slid $1.63 to $64.83 and Centex fell $1.17 to $61.74.

* Mortgage lenders also were mostly lower. Golden West dropped $1.38 to $68.67 and Countrywide Financial was off 46 cents to $34.38.

* The NYSE’s newly listed shares had a volatile session on their second day of trading, giving up some of the 25% rise in their debut. NYSE Group shares, which closed at $80 on Wednesday, jumped to a high of $88 before sliding to end at $76.10, down $3.90 for the day.

* Google stock remained under pressure, losing $10.88 to $343. It is down 17% this year amid some missteps by the company and concerns that growth may be slowing. An analyst at brokerage UBS cut his share price estimate to $400 from $425.

* Overseas, European shares were mostly higher. Selling also abated in some emerging markets, including Turkey, where the ISE-100 index rebounded 1.2%. But Brazil’s main market index fell 2.6% to 36,312.27, its fourth straight decline. Mexico’s IPC index lost 0.5% to 18,310.57.