Stock Prices Close Lower, Recover Late in Session Amid Bond Market Weakness

Strategic Insights -

Stock prices on the New York Stock Exchange closed lower across the board on February 25, with the Dow Jones industrial average closing down 33.33 points, or 0.3 percent, at 9,366.34. The session was marked by continued weakness in the bond market, which led to profit taking. The bond market's weakness was sparked by Federal Reserve Chairman Alan Greenspan's testimony before the Senate Banking Committee, which suggested a tightening in monetary policy. The yield on the 30-year bond rose 10 basis points to 5.61 percent, while the dollar fell to 119.68 Japanese yen from late Wednesday's 121.53 yen.

Key Takeaways:

  • The Dow Jones industrial average closed down 33.33 points, or 0.3 percent, at 9,366.34 on February 25.
  • The New York Stock Exchange composite index fell 4.14 points to 587.43 and the Standard & Poor's 500-stock index dropped 8.39 to 1,245.02.
  • The Nasdaq composite index fell 12.56 points, or 0.5 percent, to 2,326.82.
  • The yield on the 30-year bond rose 10 basis points to 5.61 percent.
  • Dealers cited the stronger-than-expected durable goods report, which rose 3.9 percent in January, as a factor in the uncertainty surrounding interest rate hikes.
  • Ron Menillo, general partner at GHM Inc., stated, "The report reinforces the economy is strong, there is concern the Fed may raise rates."
  • Technology shares were mixed, with Dell falling 1 1/2 to 81 3/4, IBM up 1/8 at 173 7/8, and Gateway up 7/8 at 80.
  • Internet portal company Lycos reported a second-quarter net loss of $1.5 million, or 3 cents a share, before merger-related costs.
  • Pharmaceutical shares posted losses, with Glaxo Wellcome plc ADRs falling 3/16 to 65 1/8 after the FDA denied approval of its flu medicine, Relenza.

Statistics:

  • Dow Jones industrial average: -33.33 points, -0.3%
  • New York Stock Exchange composite index: -4.14 points
  • Standard & Poor's 500-stock index: -8.39
  • Nasdaq composite index: -12.56 points, -0.5%
  • Yield on the 30-year bond: 5.61%
  • Japanese yen per dollar: 119.68 (from 121.53 yen)
  • Euro per dollar: $1.1035 (from $1.1002)
  • Gold futures contract for March delivery: $288.40 an ounce (down 30 cents)
  • Silver futures contract for March delivery: $5.549 an ounce (up 17.6 cents)

Sources:

  • UPI (February 25)
  • COMTEX (http://www.comtexnews.com)