Stocks were mixed Thursday, but the day’s trading provided evidence that investors are growing more worried about inflation, and about the U.S. economy’s ability to keep growing.
Gold prices rose, as investors showed more interest in the metal, long used as a hedge against inflation. Bonds weakened.
The economically sensitive high-tech sector softened for a third straight session. And while the indications were ambiguous, investors seemed to be showing more interest in stocks among traditional “safe-haven” sectors, such as food and drug makers.
After a government report Thursday showed inflationary pressures were much stronger than had been expected, the 10-year Treasury note yield rose to 4.22 percent from 4.16 percent the day before.
“The bond market got its first look at post-Katrina September data and didn’t like what it saw,” noted Kim Rupert of Action Economics.
A raft of economic reports came out Thursday, and “the day’s data weren’t all unfriendly,” noted Stone & McCarthy Research Associates’ Nancy Vanden Houten. But the market, she acknowledged, decided to focus on the more alarming price data, with their hints of rising inflation.
Gold prices, a classic barometer of inflation fears, rose to the highest levels in 17 years: in New York Mercantile Exchange trading Thursday, gold for December delivery rose $5.60, or 1.2 percent, to close at $459.50 an ounce.
The Dow Jones industrial average, after dropping the previous two days, eked out a 13.85, or 0.13 percent gain, to close at 10558.75.
Makers of consumer staples, including Procter & Gamble, Kellogg and Kraft, moved slightly higher; while the cyclical stocks of Caterpillar, Honeywell and United Technologies eased.
The Standard & Poor’s 500 index was stuck in neutral, rising just 0.57 of a point, or 0.05 percent, to 1227.73.
The technology-heavy Nasdaq composite index, under pressure from declines in tech stocks like Blackberry maker Research in Motion and server manufacturer Sun Microsystems, declined 3.18 points, or 0.15 percent, to a close of 2146.15.
Despite earlier speculation that Federal Reserve chief Alan Greenspan might opt to pause the Fed’s program of ratcheting up interest rates, financial futures markets indicate market players now believe it’s a near-certainty the Fed will raise rates by a quarter-point next week.
Dana Corp. shares plunged 23 percent to $9.86 after the automotive parts maker, citing higher steel costs and troubles in its commercial vehicle group, cut its 2005 profit forecast by roughly half.
Dana’s tumble, which made the Toledo company the biggest percentage loser on the NYSE, pulled down much of the sector. Industry leader Delphi fell 8.7 percent to $3.96, and ArvinMeritor lost 6 percent to $16.64.
For everything else, an IPO: MasterCard Inc., currently owned by the approximately 1,400 banks and other financial institutions that issue its credit cards, filed documents covering plans for an initial public offering.
The credit card giant intends to sell a 49 percent stake to the public for an estimated $2.45 billion.
Not high-flying: The day after both Northwest Airlines and Delta filed for bankruptcy protection, shares of low-cost providers Southwest Air and JetBlue (whose cheap fares have kept ticket prices low for most of the industry) inched higher. Not surprisingly, however, the already depressed shares of Continental and American Air parent AMR–the only two of the nation’s six biggest airlines that aren’t in bankruptcy–declined 3.6 percent and 2.2 percent, respectively.
Delta and Northwest shares continued to trade Thursday, albeit at less than $1 a share.
Local stocks:
– Baxter International rose 88 cents, or 2.2 percent, to close on the Big Board at $40.95.
– Abbott Labs received approval from federal regulators to market a carotid stent, designed to prevent strokes. But the drugmaker’s shares slipped 15 cents, or 0.34 percent, to $43.70.
