Stocks Slip as Oil, Yields Rise
Stocks finished modestly lower Thursday, after oil prices jumped and an unexpected rise in existing home sales pushed Treasury yields higher. Bulls seemed cautious with the blue-chips in sight of six-year highs, says Standard & Poor's MarketScope. After the market close, Google (GOOG) shares rose on news that it will be added to the S&P 500 index, replacing replacing Burlington Resources (BR).
The Dow Jones industrial average fell 47.14 points, or 0.42%, to 11,270.29, led downward by IBM (IBM). The broader Standard & Poor's 500 index dropped 3.37 points, or 0.26%, to 1,301.67. The tech-heavy Nasdaq composite index slipped 3.2 points, or 0.14%, to 2,300.15, supported by strength in chip stocks like Advanced Micro Devices (AMD).
Economic data sparked interest-rate jitters Thursday. February existing home sales rose 5.2% to 6.9 million units, more sharply than expected. The report ensures the Fed will raise interest rates 25 basis points on Tuesday and makes another hike in May even more likely, says S&P MarketScope.
Elsewhere, initial jobless claims unexpectedly fell 11,000 to 302,000 for the week ended March 18. The numbers show a solid job market, says Action Economics. February durable goods orders and new home sales are on the docket Friday.
On the corporate side, General Motors (GM) drew continued attention on the sale of 78% of its GMAC Commercial Holding unit to a consortium of investors for $1.5 billion in cash. The automaker's shares were lower in afternoon trading, after rising modestly Wednesday on news of a deal with former unit Delphi and the United Auto Workers union.
Software giant Microsoft (MSFT) declined after announcing it would reorganize its Windows unit. The move came days after the company said its long-awaited Windows Vista operating system won't be available to consumers until January.
Investors were also digesting a disappointing outlook from Adobe Systems (ADBE). The software maker said sales this quarter will be $640 million to $670 million, less than the $677 million some analysts expected.
M&A activity was another focus. Dell (DELL) was modestly lower after announcing that it would buy high-end computer maker Alienware in a bid for the top-shelf gaming market.
In earnings news, cereal maker General Mills (GIS) rose after posting 7% higher third-quarter profit, topping analyst estimates.
Homebuilder KB Home (KBH) was higher after posting 42% higher second-quarter earnings on a 34% increase in revenue.
In broker calls, UBS Financial upgraded Yahoo (YHOO) from neutral to buy. Prudential Equity Group also upgraded its ratings for oil companies ConocoPhillips (COP) and Marathon Oil (MRO).
In the energy markets Thursday, May West Texas Intermediate crude oil futures closed up $2.14 at $63.91 a barrel.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index fell 18.6 points, or 0.31%, to 5,988.9. Germany's DAX index rose 14.8 points, or 0.25%, to 5,947.78. In Paris, the CAC 40 index was unchanged at 5,194.78.
Asian markets finished mostly higher. Japan's Nikkei 225 index edged lower 6.11 points, or 0.04%, to 16,489.37. In Hong Kong, the Hang Seng index rose 128.36 points, or 0.82%, to 15,771.17. Korea's Kospi index added 2.43 points, or 0.19%, to 1,312.26.
Treasury yields moved higher after the existing home sales data. Prices for 10-year Treasury notes finished lower at 98-06/32 with a yield of 4.73%, while 30-year bonds fell to 96-04/32 for a yield of 4.74%.