GW--Of interest>>>NEW YORK (Reuter) - Stocks fell broadly Thursday as the weight of rising interest rates finally caught up to the high-flying equities market.
The Dow Jones industrial average skidded 71.31 points to close at 8,188, giving back nearly all its 72-point gain from Wednesday. Broader indexes also fell and the Nasdaq composite saw its string of record closes snapped at six sessions.
Analysts pointed to a weak showing in the bond market as the catalyst for the decline. The yield on the benchmark 30-year Treasury rose to 6.53 percent.
``Yields went above 6.50 percent and that was a perfect excuse for some profit-taking in the market,'' said Scott Bleier, chief investment strategist at Prime Charter Ltd.
Analysts said a mixed reception to the Treasury's sale of $10 billion of 30-year bonds touched off the weakness that sent rates rising. But they also noted heightened concern that the economy is picking up more steam than the Federal Reserve may be willing to tolerate.
New evidence of the economy's apparent resurgence came as some retailers reported generally solid sales for July. The sales figures may presage strength in next week's national report on retail sales, considered to be a key element in the Fed's interest rate policy decision-making.
``That's absolutely going to be one of the more important pieces of data the Fed will look at,'' said Bill Meehan, market analyst at Prudential Securities. ``So in that respect, today's figures might be a little bit of a cause for concern.''
The nation's largest retailer, Wal-Mart Stores Inc., said sales at stores open at least a year rose 6 percent in July, in line with forecasts. Increases at Kmart Corp. and Federated Department Stores Inc. were slightly above forecasts.
The strong sales got mostly a yawn from the stock market, with Federated rising 5/16 to 43-9/16, Kmart adding 1/16 to 11-11/16 and Wal-Mart falling 5/16 to 38-1/16.
``A lot of the good news had already been fairly well discounted for the retailers,'' Meehan said. ``Since the mid-April market lows, this group had been significantly outperforming the market.''
Financial stocks fell sharply, hit hard by the rise in long-term rates. Citicorp lost 3 3/8 to 136 1/2 and BankAmerica shed 2 1/4 to 70 1/2.
The 30-year Treasury fell 20/32, or $6.25 on a $1,000 bond, raising its yield to 6.53 percent from 6.48 percent Wednesday. Bond prices and yields move in opposite directions.
Among individual issues, Ethan Allen Interiors jumped 6-15/16 to 61-11/16 after the home furnishings company reported stronger-than-expected earnings late on Wednesday and declared a stock split.
United Healthcare Corp. tumbled 7-5/16 to 50 3/4 after the health maintenance organization reported earnings that did not meet expectations on Wall Street, two days after another HMO company, Aetna Inc., reported disappointing results.
Shares in Aetna extended their recent slide, falling 5 1/4 to 96 3/4.
The Nasdaq composite index fell 6.26 points to 1,624.18.
In the broader market, declines beat advances 1,552 to 1,218 on active volume of 576 million shares on the New York Stock Exchange.
The Standard & Poor's index of 500 stocks fell 9.13 points to 951.19.
The NYSE composite index fell 4.38 to 492.62. The average price per share lost 41 cents.
The American Stock Exchange composite index fell 1.99 to 652.07.
The Wilshire Associates Equity Index -- the market value of NYSE, American and Nasdaq issues, also known as the Wilshire 5,000 -- ended at 9,037.10, down 73.320, or 0.8 percent.
Transmitted: 8/7/97 6:29 PM EDT |
