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Stocks send mixed signals
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May 6, 1999: 11:49 a.m. ET
Greenspan's note of caution spooks bonds, leaving Wall Street in disarray
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NEW YORK (CNNfn) - Volatility and ambivalence were the watchwords for Wall Street Thursday, as investors struggled to navigate between ominous hints from Alan Greenspan, weakness in bonds and the urge to pick up some stock market bargains.
Shortly before 11:30 a.m. ET, the Dow Jones industrial average was down 28.92 points at 10,926.49. Losers outnumbered gainers by 1,389 to 1,270 on the New York Stock Exchange, while volume reached 337 million shares.
The Nasdaq Composite reasserted itself to gain 4.73 points to 2,539.18, but the S&P 500 index slipped 5.48 to 1,341.83. (Click here for a look at today's list of CNNfn's market movers.)
Much of Wall Street's gloomy sentiments were due to bonds, which retreated to a key level of support after comments from Federal Reserve Chairman Alan Greenspan. Greenspan offered investors little comfort, instead quashing the market's utopian belief that the U.S. economy is in "a new era" of sustained growth without inflation.
The remarks left the wary bond market paralyzed by dread that inflation and higher interest rates are on the horizon, pushing the benchmark 30-year Treasury bond down 21/32 of a point in price while the yield climbed to 5.75 percent.
The bond market's weakness eroded the dollar's strength against the yen, while the euro continued on its recent upward course to hit a three-week high.
Bad news for techs, banks
Back on Wall Street, investors found little reason to reward technology stocks even though Greenspan repeated his praise for technological advancement as a defining factor in the economy's struggle to expand without generating inflationary pressures.
Instead, rising bond yields spooked investors already wondering how the tech sector can justify its high valuations, especially if the threat of inflation spurs the Federal Reserve to increase interest rates.
The Dow's computer makers were mixed, with shares of Hewlett Packard (HWP) slipping 1 to 79-1/4 as IBM (IBM) defied the trend, climbing 1-1/16 to 213-1/16. Intel (INTC) shed 1-1/8 to 62-7/8 and networking leader Cisco (CSCO) declined 1-5/32 to 109-13/16.
Greenspan's increasingly cautionary tone also ensured a jittery morning for financial stocks, which are especially sensitive to fluctuations in long-term interest rates as reflected in bond yields.
Shares of J.P. Morgan (JPM) fell 2-5/16 to 136-11/16, while elsewhere in the Dow financial companies Citigroup (C) slipped 1-1/8 to 71-5/8 and American Express (AXP) lost 1-3/4 to 127-5/8.
Microsoft and AT&T hold firm
One bright spot in the technology sector was software giant Microsoft (MSFT), which saw shares climb 1-13/16 to 80-15/16 on the back of an arrangement with Dow telephony company AT&T (T).
The deal, aimed at finalizing AT&T's $58 billion merger with cable firm MediaOne (UMG), will give Microsoft a larger share of the software used in AT&T's television set-top networking devices in exchange for a $5 billion investment in AT&T stock.
AT&T shares surged 4-9/16, nearly 8 percent, to 61-1/2, while MediaOne jumped 2-3/4 to 79-5/8.
The commonly traded non-voting stock of Comcast (CMSCK), the former leading contender for a MediaOne merger, climbed 11/16 to 36-5/16. Comcast's less liquid voting shares (CMSCA), which would have been traded to Media One shareholders and which are primarily held by company insiders, traded at 36 5/16 after a 2-for-1 stock split.
-- by staff writer Robert Scott Martin
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