Stocks slumped Thursday, despite upbeat data in a closely watched report on manufacturing conditions in the mid-Atlantic region.
Treasury securities closed higher in thin trading.
The day’s top economic report, by the Federal Reserve Bank of Philadelphia, portrayed greater-than-expected economic strength.
But the principal surprise in the report was that manufacturers on average paid and received lower prices for raw materials and goods sold.
This finding supported the view of the Federal Reserve that inflation is under control, despite higher oil prices.
“The recent oil spike is not getting the same traction in denting [business] sentiment as was the case in previous run-ups,” said economists at Action Economics in Denver.
Crude oil futures held above the $60-a-barrel mark, as they have for all of August. Crude oil for September delivery added 2 cents a barrel, to $63.27.
The Dow Jones industrial average rose 4.22 points, to 10.554.93. The Dow’s advance related to a rally in just one of its components, tobacco purveyor Altria Group.
Tobacco company shares jumped on word of an Illinois Supreme Court ruling against a class-action lawsuit involving auto repairs ordered by State Farm Insurance.
Analysts said the ruling bodes well for class-action suits against the tobacco industry. Altria Group shares rose $2.53, or 20.14 Dow points, to $70.39.
The broader Standard & Poor’s 500 index slipped 1.22, to 1219.02, weighed down by Pfizer, Microsoft and Intel.
The Nasdaq composite index lost 9.07, to 2136.08. The Russell 2000 index of small-company stocks dropped 3.63, to 651.19.
Two major clothing retailers, Gap and Limited Brands, posted disappointing second-quarter sales and trimmed their outlooks for 2005.
The companies and analysts who follow them did not blame higher gasoline prices as the cause of reluctant shoppers. They cited poor merchandise strategies, particularly a failure to stock popular fashion-oriented jeans.
Wall Street trading volume was moderate, ahead of Friday’s monthly expiration of stock-related futures and options contracts.
New York Stock Exchange trading volume reached 1.39 billion shares. Losers beat winners by a 5-3 ratio among NYSE-listed stocks.
Nasdaq trading volume totaled 1.38 billion shares, as losers topped winners by about a 3-2 ratio.
Expanding the pi: Internet search service Google marked its one-year anniversary as a public company by disclosing plans to sell $4 billion of additional shares.
Google said it would use the proceeds for growth through acquisitions, as well as internal capital investments. Google is fighting competition from Yahoo and Microsoft.
Google shares dropped $5.11, to $279.99, reflecting worries about the potential dilution of earnings caused by the additional shares.
But the dilution would be muted if investments made with the proceeds from the stock sale boost overall returns to shareholders.
The proposed offering of more than 14 million shares, or nearly 5 percent of shares currently outstanding, did not indicate whether the company would employ an Internet auction as when it went public in August 2004. The IPO brought a per-share price of $85.
The auction was widely criticized as a failure by Wall Street experts. But Google proved the experts wrong and hundreds of individual investors right, as its shares more than tripled in value in 12 months.
Apparently, Google intends to maintain its unique appeal to individual investors.
The exact amount of shares to be offered, before an amount earmarked for underwriters, was 14,159,265.
The mathematical ratio of the circumference of a circle to the circle’s diameter, known as pi, is 3.14159265.
Local news: Global real estate manager Jones Lang LaSalle, Chicago, initiated a semiannual dividend of 25 cents a share.
– Broker Robert W. Baird boosted its investment rating on retailer Kohl’s, based in Menomonee Falls, Wis., to “outperform” from “neutral,” with a price target of $66. Shares rose 37 cents, to $54.83.
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bbarnhart@tribune.com
Bill Barnhart
