Stocks Tumble As Interest Rates Resume Rise
Stocks faltered in a bid for more new highs Thursday as the bond market resumed its recent slide, lifting interest rates further from last week’s 17-month low.
The Dow Jones industrial average fell 71.31 to 8,188.00 despite posting a small advance for much of the day. An early 40-point gain had put the blue-chip barometer just a half point shy of its first trip above 8,300.
Broader market indicators also sank over the final two hours after spending most of the session hovering near Wednesday’s record marks. The Nasdaq composite index failed to extend its streak of six consecutive closing highs.
“It’s a basic reaction for a market that has been exceptionally strong,” said Ned Riley, chief investment officer at the Bank of Boston. “The interest rate environment turned negative (in the bond market) and people were just selling because they’ve done exceptionally well. They’ve ridden the wave nicely. Typically, there’s time for a rest.”
Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, where volume was very heavy again, totaling 576.03 million shares as of 4 p.m., up slightly from Wednesday’s busy pace.
Some of the stocks that moved substantially or traded heavily Thursday:
NYSE
AT&T, up 1-1/16 at 40-1/8.
Brown Brothers Harriman upgraded its short-term rating on AT&T to “buy” from “hold,” the Dow Jones News Service reported.
Caterpillar, up 2-3/16 at 60-11/16.
Merrill Lynch upgraded its near-term rating on Caterpillar to “accumulate” from “neutral,” the Dow Jones News Service reported.
First Brands, up 1-1/8 at 21-5/8.
The maker of Glad bags and Scoop Away cat litter reported better than expected earnings for its latest quarter and announced plans to buy back up to 1 million shares, or about 2.5 percent, of its common stock.
Musicland Stores, up 1/2 at 4-1/2.
The retailer’s sales from stores open at least a year rose 9.1 percent in July. Overall sales rose 1.4 percent compared with July 1996.
NASDAQ
Apple Computer, up 2-11/16 at 29.
The stock rose for a second session after the surprise announcement that Microsoft had formed an alliance with Apple and will invest $150 million in the troubled computer maker.
OzEmail, up 5-1/2 at 12-1/2.
The provider of Internet services in Australia and New Zealand reported a second-quarter profit of $6.5 million, up sharply from about $600,000 in the same period last year.
Wet Seal, down 7-9/16 at 19-1/8.
The casual-apparel retailer cautioned that its second-quarter earnings would be below expectations because of sluggish sales.