Stocks Fall As Bonds Succumb To Profit-Taking

Stocks pulled back again Thursday as interest rates spiked higher in the bond market after falling toward a 1-1/2-year low over the past two weeks.

The Dow Jones industrial average fell 58.70 to 7,848.01 after surrendering an early 23-point gain.

Broader stock indicators also posted modest losses as the bond market was jostled by a series of robust economic readings that aggravated inflation worries.

The Commerce Department reported that a record surge in demand for electrical equipment caused a surprising 2.7 percent jump in orders of durable goods during August.

Separately, the Labor Department said new applications for unemployment benefits unexpectedly fell by 2,000 last week to 306,000, and a realty group reported that sales of previously owned homes rose 3.3 percent in August to the highest level since such figures first were compiled in 1968.

The recent bond rally has largely been fueled by reports showing negligible inflation in wholesale and retail prices during August.

But in a week with a very light calendar for economic reports, Thursday’s data served as a quick reminder that the pace of business is far too brisk to forget about inflationary pressures.

Federal Reserve officials have been concerned that a strong job market will force manufacturers to boost wages - and prices - as they try to keep up with heavy consumer demand. Still, few analysts expect the central bankers to slow the economy with higher interest rates when they meet Tuesday.

Some of the stocks that moved substantially or traded heavily Thursday:

NYSE

StarTek, up 1-3/16 at 12-9/16.

The Denver-based provider of business management services said its third-quarter revenues will be in line with Wall Street estimates despite postponing two projects until the fourth quarter. StarTek also announced that it will provide services in Asia for Microsoft under an existing contract.

Sea Containers class A, up 1-3/8 at 27-3/8.

GE Capital Services and Bermuda-based Sea Containers agreed to form a joint venture to operate the companies’ marine container fleets.

NASDAQ

Cognos, down 10-3/4 at 22

The business software concern said its growth rate will moderate over the next few quarters. Cognos, based in Ottawa, issued the cautious outlook with its earnings report late Wednesday.

AMEX

Air & Water Technologies, up 1/4 at 1-3/4.

The struggling builder and manager of water and wastewater systems reached a recapitalization agreement with its largest shareholder. Compagnie Generale des Eaux said late Wednesday it will invest $185 million to $210 million in Air & Water, which is based in Branchburg, N.J.