Stocks Mixed After Service Sector Data
Wall Street traded mixed Thursday, kept aloft by new buyout activity and strength in the U.S. service sector but wavering due to jitteriness over rebounding bond yields.
The Institute for Supply Management's index of service sector activity in June rose to 60.7 from 59.7 in May, indicating that non-manufacturing industries saw slightly faster expansion. The figure was better than expected, fueling the market sentiment that the economy is recovering from a slow first quarter.
However, this week's most closely watched piece of data will be the Labor Department's jobs report Friday, which bond investors are anticipating will show a solid rise in payrolls. That expectation dampened prices of the safe-haven asset, pushing up the 10-year Treasury note's yield back to 5.10 percent Thursday from 5.04 percent Tuesday - which worried some stock investors about high rates slowing down business.
On Monday, the 10-year yield had slipped below the 5 percent level for the first time since early June, when the benchmark yield surged past 5 percent to a five-year peak of about 5.30 percent.
Also weighing on the Dow Jones industrial average was General Motors Corp., one of blue-chip index's 30 components, which was downgraded by a Bear Stearns analyst after the automaker posted Tuesday afternoon a 21.3 percent drop in June sales compared to last year.
Still, many on Wall Street remained confident about stocks amid takeover news. Hilton Hotels Corp. agreed Tuesday to an all-cash buyout from Blackstone Group in a $20.1 billion deal; chemical company Huntsman Corp. said Wednesday a private-equity firm made a cash buyout offer of about $6 billion that trumps last week's bid from a Dutch company; and a Coca-Cola Co. spokesman said Wednesday the company is looking into buying Cadbury Schweppes PLC's Snapple iced tea brand or building its own tea brand.
In mid-morning trading, the Dow fell 10.89, or 0.08 percent, to 13,566.41.
Broader stock indicators were higher. The Standard & Poor's 500 index was up 0.31, or 0.02 percent, at 1,525.18, and the Nasdaq composite index rose 4.02, or 0.15 percent, to 2,648.97.
Trading volumes were expected to be low again Thursday, with many traders taking time off after the holiday. That could exacerbate price swings in a nervous market.
GM fell $1.60, or 4.2 percent, to $36.37 after the analyst downgrade.
After agreeing to private-equity buyouts, Hilton Hotels soared $9.34, or 26 percent, to $45.39, and Huntsman jumped $2.93, or 12 percent, to $27.33.
Coca-Cola slipped 16 cents to $52.74 after saying it is considering buying Snapple.
The dollar fell against most other major currencies. The Bank of England raised its benchmark interest rate by 0.25 percent for the fifth time in less than a year to 5.75 percent, as expected, and the European Central Bank indicated it might raise rates later in the year.
Gold prices fell.
Light sweet crude futures rose 21 cents to $71.62 a barrel on the New York Mercantile Exchange, paring a bigger jump after the Energy Department reported crude oil and gasoline inventories increased last week. The data had little discernible effect on stock trading.
The Russell 2000 index of smaller companies rose 1.82, or 0.21 percent, to 850.02.
Overseas, the often-volatile Shanghai Composite Index plunged 5.3 percent due to worries about government steps to cool down the market and concerns that several new share listings could dampen prices.
Japan's Nikkei stock average rose despite the drop in China's stock market, gaining 0.29 percent. In afternoon trading, Britain's FTSE 100 fell 0.27 percent, Germany's DAX index fell 0.55 percent, and France's CAC-40 fell 0.47 percent.
Last Updated: Thu, 05 Jul 2007 21:09:00
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