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Markets & Stocks
U.S. stocks take a fall
October 1, 1999: 5:13 p.m. ET

Strong economic data upset the market, raising fears of inflation, higher rates
By Staff Writer Malina Poshtova Zang
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NEW YORK (CNNfn) - U.S. stock markets suffered mostly losses Friday after the release of stronger-than-expected economic data raised fears of rising inflation and speculation that the Federal Reserve could hike interest rates at a policy meeting next week.
     A late wave of bargain hunting, however, helped the market recover and close off its lowest levels for the day.
     The Dow Jones industrial average fell 63.95 points to 10,273.00. On the New York Stock Exchange, market breadth was decidedly negative, with declines ahead of advances by 1,804 to 1,253 on heavy trading volume of 897 million shares.
Dow

The Nasdaq composite fell 9.31 points to 2,736.85 and the S&P 500 index managed to crawl out of negative territory, finishing the day up 0.10 points at 1,282.81.
     Despite a volatile ride through the week, most major market gauges ended at levels close to last Friday's. The Dow eased 0.06 percent for the week, its gain for the year dropping slightly to 11.89 percent. The Nasdaq also inched back 0.13 percent, trimming its advance for the year to 24.82 percent. And the S&P 500 index crawled up 0.43 percent, raising its gain for the year to 4.36 percent.
Nasdaq

Wall Street was upset over the release of stronger-than-expected personal income data for August, and many investors opted to exercise caution ahead of what could be a crucial week for the market.
     Adding to the market's bearish sentiment was news that the National Association of Purchasing Management's September index jumped to 57.8 from 54.2 in August, sharply above expectations and indicating that manufacturing activity is extremely robust. Moreover, the index's prices paid component registered a jump to 67.6 from 59.8 in August, a potential signal that inflation could be heating up.
     The Federal Reserve is set to meet Tuesday to discuss interest rates. Even though the majority of market watchers doesn't expect the central bank to raise short-term interest rates, strong economic data in recent weeks have caused investors to be skittish with stocks.
     Renewed weakness in the dollar Friday and profit-taking after the previous day's market rally added to the negative tone on Wall Street.
     The bond market opened sharply lower as profit-taking hit Treasury securities as well. Bond prices slid further after the release of the bearish personal income and NAPM data. The bellwether 30-year Treasury bond shed 1-9/32 points in price, its yield jumping to 6.13 percent from Thursday's 6.05 percent.
     The dollar fell against the yen as investors prepared for what could be an upbeat survey of Japanese business sentiment, due out next week. The Bank of Japan's lack of concrete action to curtail the yen, following a pledge last week to do so, added pressure to the dollar. Uncertainty over the near-term prospects for U.S. financial assets pushed the dollar lower against the euro.
    
Rate-sensitive stocks suffer

     Investors used the day to lighten up their holdings of interest-rate sensitive technology and financial issues, just in case the Fed does decide to hike rates next week.
     Otherwise, most market participants focused their efforts on companies involved in the day's news, especially those related to the upcoming third-quarter corporate earnings reporting season.
     Shares of Dow component DuPont (DD) rose 2-1/2 to 63 after the company denied a CNBC report that it was about to issue a profit warning.
     But the stock of fellow Dow member Hewlett Packard (HWP) fell 3-3/8 to 87-3/8 after new chief executive Carly Fiorina said HP's fourth-quarter revenue would be at the low end of forecasts, the company has a "decent shot" of meeting earnings projections, and a restructuring of top management is in the works.
     Shares of cosmetics power Revlon (REV) followed a similar path -- tumbling 61-4, or more than 34 percent, to 12 -- after the company said its third quarter will show a large loss, instead of the small profit Wall Street expected.
     Elsewhere in the market, shares of Excite@Home (ATHM) jumped 3-1/16 to 44-1/2 after majority owner AT&T (T) said it is considering its options regarding the ownership of the Internet portal/service provider.
     And shares of Eli Lilly (LLY) rose 4-3/8 to 68-9/16 after the Food and Drug Administration said the company's osteoporosis treatment Evista can be used for the treatment of the disease, not just its prevention.
     (Click here for a look at today's CNNfn market movers.)
     (Click here for a look at today's CNNfn technology stock report.)Back to top

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