Stock Prices Move Lower As Bond Market Tumbles
May 05, 2011
A surprisingly strong report on factory orders renewed inflation jitters among investors Friday as stocks responded negatively to a sharply falling bond market. The Dow Jones Industrial Average lost 10.73 to 5722.74 after rallying to near-record levels Thursday, when the industrials came within 1% of breaching the record 5778 close set in May. Broader market indicators also slipped, with the Standard & Poor's 500-stock index down 3.65 to 667.03, the New York Stock Exchange Composite Index off 1.49 to 357.23 and the Nasdaq Composite Index down 0.91 to 1143.05. Declining issues outpaced gainers 1,266 to 1,001, on Big Board volume of about 308 million shares. Gregorio Bigler, technical analyst at Kemper Securities Inc., attributed the market's weakness to ``the sharp decline in bonds, and it was also clipped from time to time by sell-programs.'' Bonds tumbled Friday on word of an unexpectedly strong jump in durable goods orders. The 30-year Treasury fell about 1 1/4 points, or $12.50 for a bond with a $1,000 face amount, to yield 6.94%. The Commerce Department reported that orders to U.S. factories for big-ticket durable goods rose 1.6% in July, the second advance in three months and a much stronger increase than the 0.5% gain that had been expected. Orders are considered a key gauge of the nation's manufacturing sector; rising demand for goods could mean increased production and more jobs. Bond investors fear strength in the economy, and its accompanying inflation, as inflation erodes the value of fixed-income investments. Mr. Bigler predicted the coming week of trading will most likely mirror this week's sluggish performance. ``I think we'll see the same pattern we've seen recently. Whatever the news of the day happens to be will largely set the tone,'' he said. Zenith Electronics fell 2, or about 12%, to 14 7/8 on profit-taking after the Glenview, Ill., developer of video products saw its shares nearly double a day earlier after the company said it won a $1 billion contract to manufacture digital television set-top boxes for Americast, the budding cable-entertainment consortium. Circus Circus Enterprises climbed 1 1/4 to 32 5/8 after the Las Vegas casino and hotel operator said late Thursday its second-quarter earnings fell to seven cents a share, including a 40.1 million in pretax writeoffs associated with several of the company's construction projects. Before the charges, net income was 36 cents a share. Circus Circus posted earnings of eight cents a share last year, including pretax charges of $45.1 million associated with a discontinued riverboat project in Chalmette, La.
