Stocks end mixed as oil and gold sink
NEW YORK » A late-day rebound left stocks mixed yesterday as oil and gold prices tumbled and mild economic data lifted bonds from their recent lows.
News of a slowdown in manufacturing activity in the New York region brightened the outlook for interest rates and helped bond yields retreat from four-year highs. A drop in first-quarter existing home sales also reinforced views that interest rates have been raised enough to clamp down on economic growth.
But the day's up-and-down trading was evidence of investors' persistent unease over inflation and interest rates after the Federal Reserve said last week that more rate hikes could be needed to battle soaring commodities prices. Weakness in global stock markets and a languishing dollar overshadowed a steep plunge in crude oil throughout most of yesterday's session; the late gains reflected bargain hunting rather than a change in sentiment.
"I think what we're seeing here is the fear factor escalating," Peter Cardillo, chief strategist and market analyst at S.W. Bach & Co., said of the market's inflation and interest rate worries.
At the close, the Dow Jones industrial average added 47.78, or 0.42 percent, to 11,428.77, after sliding as much as 48 points earlier in the day.
Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index rose 3.26, or 0.25 percent, to 1,294.50, and the Nasdaq composite index lost 5.26, or 0.23 percent, to 2,238.52.
Declining issues led advancers by 9 to 7 on the New York Stock Exchange, where preliminary consolidated volume of 2.62 billion shares matched the 2.62 billion shares that changed hands Friday.
The Russell 2000 index of smaller companies fell 4.76, or 0.64 percent, to 737.64.
Bonds leaped on the weak manufacturing data, with the yield on the 10-year Treasury note dropping to 5.15 percent from 5.2 percent late Friday. While the U.S. dollar took back some losses against the Japanese yen, traders fretted that a continually weak dollar could feed inflation; when the dollar is down, more of the U.S. currency is needed to buy foreign-made goods.
Elsewhere, gold prices dove from 26-year highs to about $685 an ounce. Cardillo attributed the retreat to overbuying in recent weeks as gold and silver pressed toward record levels, but noted that the drop "doesn't mean we're not headed higher in the short term."
Another steep dropoff in crude futures helped support stocks after the International Energy Agency last week reduced its forecast for global oil demand. A barrel of light crude sank $2.63 to settle at $69.41 on the New York Mercantile Exchange.