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Stocks under pressure
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August 10, 1999: 11:50 a.m. ET
Rising oil prices, ongoing interest rate fears cover Wall Street in red ink
By Staff Writers Malina Poshtova Zang and Robert Scott Martin
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NEW YORK (CNNfn) - U.S. stocks continued their slide Tuesday as high bond yields and rising oil prices made investors break out the red ink to paint an unflattering picture of inflation and higher interest rates ahead. Transportation shares suffered especially deep wounds.
Shortly before 11:30 a.m. ET, the Dow Jones industrial average fell 75.35 points to 10,632.35. Market breadth was decisively negative, with declines outnumbering advances by 1,958 to 695 on the New York Stock Exchange, while trading volume reached 253 million shares.
The technology-rich Nasdaq composite tumbled 40.99 points, or 1.6 percent, to 2,477.99 and the S&P 500 index lost 15.12, or 1.2 percent, to 1,282.68. (Click here for a look at today's list of CNNfn market movers.)
Bonds crept into positive territory, helped by the bond market's growing acceptance of the likelihood of another interest rate hike in a few weeks. Still, investors remained edgy, leaving the bellwether 30-year Treasury bond up 1/4 of a point in price as the yield eased to 6.21 percent from a 22-month high of 6.25 percent touched overnight.
The weight of oversupply also kept the market subdued as investors prepared to absorb $15 billion in five-year notes later in the day, the first in a series of three auctions included in the Treasury Department's quarterly refinancing schedule.
The dollar gave up modest ground against both the euro and the yen as global investors remained unwilling to pour their money back into dollar-denominated U.S. stocks and bonds.
Deals don't perk up the market
Back in the stock market, a series of mergers, normally a sign of healthy times for the corporations and their stocks, failed to stir much excitement among investors more concerned about the size of inflation and the number of rate hikes the Federal Reserve could administer this year.
News of potential strong competition provided but faint encouragement to Dow component, Alcoa (AA), currently the largest player in the aluminum industry, leaving shares up 3/16 to 65-13/16. Three of Alcoa's largest rivals, Canada's Alcan (AL), Pechiney of France and Switzerland's AluSuisse Lonza, confirmed Tuesday they are holding three-way merger talks.
Although the deal could produce an aluminum giant with annual revenue as high as $20 billion, Alcan's shares, the only stock of the three traded on a U.S. exchange, climbed only a subdued 5/8 to 32-7/16.
In the telecommunications equipment sector, news that Lucent (LU) is buying International Network Services (INSS) for $3.7 billion sent International Network's stock up 3-5/16 to 50-3/4. But Lucent's shares fell 1-7/8 to 61-3/4.
Other technology heavyweights joined Lucent in negative territory. On the Dow, IBM (IBM) lost 1-13/16 to 120-3/8 and Hewlett Packard (HWP) slipped 1-5/16 to 106-3/8, while on the Nasdaq Cisco (CSCO) tumbled 2-5/16 to 57-1/2, Dell (DELL) gave up 5/8 to 40-3/8 and Microsoft (MSFT) eased 15/16 to 82-7/8.
Transports on the run
Rising oil prices pushed the heavily fuel-dependent transportation sector into a sharp dive, driving investors from airlines and freight shares alike and knocking the Dow transports down 71.40 points, or 2.2 percent, to 3,149.05.
Crude oil touched a 22-month high of $21.27 a barrel Monday and held onto the bulk of their strength in Tuesday trading. By late morning, light sweet crude was down 3 cents on the barrel at $21.17.
Among airline shares, American Airlines holding company AMR (AMR) tumbled 2-5/16 to 59-1/16 and United parent UAL (UAL) lost 1-5/16 to 58-5/8, while USAirways (U) fell 1-3/16 to 31-5/16 and Delta (DAL) retreated 1-5/8 to 54-5/8.
Federal Express parent FDX (FDX) shed 2-1/16 to 40-1/4 and Airborne Freight (ABF) lost 11/16 to 23-1/2.
Meanwhile, investors flocked to oil shares on the news that the sector is continuing its recovery from a slump that once seemed endless. On the Dow, shares of Exxon (XON) added 9/16 to 80-15/16 and Chevron (CHV) gained 9/16 to 97-3/16.
Solid earnings, skimpy bulls
Among the day's other news, stronger-than-expected earnings delivered by a retail powerhouse and an oil giant also failed to inspire much of a rally in the broader stock market.
Shares of Wal-Mart (WMT) inched up a modest 11/16 to 40-3/4 even after the discount retailer delivered second-quarter results that exceeded forecasts.
Faring marginally better in the general climate of oil enthusiasm, BP Amoco (BPA) saw its stock gain 13/16 to 119-1/16 after it too reported strong earnings, which came in the middle of the expected range.
Medical supplier McKesson HBOC (MCK) suffered after a warning that it remains "cautious" about its earnings outlook for the rest of the year left shares down 15/16 to 31. The company also restated its first-quarter profits, which previously had been adversely affected by accounting irregularities, but even those numbers failed to meet Wall Street's forecasts.
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