Stocks, Dow Jones down this week
August 31, 1999
WashingtonWashington — Stocks fell sharply today after the early release of a key economic report rattled the market and ignited fears of higher inflation. — Stocks fell sharply today after the early release of a key economic report rattled the market and ignited fears of higher inflation.
Washington — Stocks fell sharply today after the early release of a key economic report rattled the market and ignited fears of higher inflation.
In mid-afternoon trading on Wall Street, the Dow Jones industrial average was down 79.47 at 10,834.66.
Broader stock indicators were also lower. The Standard & Poor’s 500 index was down 10.50 at 1,313.52, and the Nasdaq composite index was down 23.39 at 2,689.30.
After swinging between negative and positive territory this morning, stocks fell after the National Association of Purchasing Management inadvertently released its monthly survey on manufacturing activity. The report, which was scheduled for release on Wednesday, was posted on the organization’s Web site.
The monthly index of business activity rose to 54.2 percent from 53.4 percent in July. A reading above 50 is a sign of growth in the industrial sector of the U.S. economy.
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A segment of the report that tracks prices paid by industry for raw materials and supplies rose to the highest levels since June 1995. Analysts said that figure may have been most responsible for the selloff of stocks, as it suggested inflation may be building as the economy continues to grow.
Separately today, the Conference Board said its consumer confidence index fell in August for the second straight month, although the decline was less than expected. The index, which measures consumers’ likeliness to spend, edged down 0.4 of a point. Stocks barely reacted to the report.
In a quiet week, with many Wall Street professionals taking vacations, many investors are willing to wait for each new piece of economic data to guide their decisions. On Friday, the Labor Department will issue its report on unemployment, which includes job creation and wage data.
Any suggestions that the U.S. economy is growing too quickly could convince investors that the Federal Reserve will raise interest rates for a third time this year.
”This is a market searching for leadership,” said Ned Riley, chief investment officer at BankBoston. ”Most people are waiting for the payrolls (job creation) report to formulate opinions about what the Fed might do next.”
Higher rates threaten stocks by cutting into corporate profits and increasing the value of alternative investments, like bonds. Today, yields on the benchmark 30-year Treasury bond rose to 6.09 percent, from 6.05 percent late Monday.
Oil companies were mostly higher, as Chevron rose 1 1/4 to 92 9/16 and Exxon rose 9/16 to 78 3/8. Crude oil futures jumped sharply Monday after Venezuela, Mexico and Saudi Arabia decided against raising production.
Office Depot slipped 1/16 to 10 7/16 after shedding 26 percent in after-hours trading Monday. The company said it expects to miss earnings expectations for the rest of 1999 as weaker sales and price erosion on paper supplies hurt gross margins. Shares of competing office supply stores fell today. Staples lost 1 7/16 to 20 1/2.
Declining issues outnumbered advancers by a 12-to-7 margin on the New York Stock Exchange, where volume came to 514.7 million shares, ahead of Monday’s quiet pace.
The Russell 2000 index of smaller company stocks was down 2.37 at 424.99.