Bond Losses Pull Stocks Lower
June 22, 1999 6:26 PM
NEW YORK -(Dow Jones)- Another climb in long-term Treasury rates and profit-taking in the Internet sector sent stocks moderately lower Tuesday.
The Dow Jones Industrial Average fell 94.35 to end at 10721.63. The Chicago Board of Trade's Dow industrials September futures contract settled at 10815, down 85 points.
On the Big Board, declining stocks outnumbered advancers by 9 to 7 on volume of 704 million shares, while Nasdaq losers topped gainers by 7 to 5 on 992 million shares traded.
Among broad-market measures, the S&P 500 lost 13.12, or 1%, the Nasdaq Composite Index slid 50.02, or 1.9%, the NYSE index lost 3.83 and the Russell 2000 index of small-capitalization stocks dropped 2.11.
Bond prices weakened for the second straight day after rallying late last week. The benchmark 30-year Treasury's yield - which moves inversely to the price - rose to 6.06% from 6.02% late Monday.
The upturn in bond prices last week, which followed remarks from Federal Reserve Chairman Alan Greenspan that suggested the Fed will take only modest steps to cool off the economy, probably stemmed from short-sellers covering their positions and didn't reflect some grand shift in investor sentiment, said Joseph Carson, chief fixed-income economist at Deutsche Bank Securities. "It was quite odd for bonds to rally when the Fed said it would raise interest rates," Carson added.
Bond traders said Treasurys are unlikely to regain strength this week because companies are issuing a fairly heavy amount of debt and Fed policymakers are widely expected to raise short-term rates by a quarter point next week, as Greenspan signaled.
The dollar gave back some of Monday's strong gain against the yen but was modestly higher against the euro.
Internet stocks drifted most of the session before succumbing to profit-taking after a strong five-session rebound. The Dow Jones Internet Index fell 8.40 points, or 3.6%, to 227.07.
Online industry bellwether America Online (AOL) fell 5 7/8 to 109 1/2, retailer Amazom.com (AMZN) lost 6 to 117 1/2, high-speed access provider Excite@Home (ATHM) dropped 3 5/8 to 54 1/4 and portal site Yahoo! (YHOO) slid 6 3/8 to 152 1/2.
But Internet service provider Juno Online Services (JWEB) jumped another 2 3/16 to 16 5/16 after Salomon Smith Barney began coverage with a "buy" rating Monday, and Earthlink Network (ELNK) shot up 9 5/8 to 57 1/4 amid takeover rumors.
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