Stocks close mixed on worry over rates

WALL STREET

May 15, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks were mixed yesterday as concern about higher interest rates kept a lid on prices.

"Interest rates are paramount on people's minds," said Richard Ciardullo, director of trading at Eagle Asset Management. "The worry is that they're going to go higher."

The Dow Jones industrial average closed 4.98 lower, at 3,443.01.

"The economy is recovering, but investors are concerned by the rise in interest rates," said Peter Canelo, strategist at NatWest Securities. With rates on long-term Treasury issues close to 7 percent, investors aren't likely to put much more money into the stock market, he said.

Many investors have moved money into the stock market on the expectation that rates would stay low. This week's reports on April producer and consumer prices, both of which rose, indicate that inflation may be more of a problem than previously thought. That prospect has prompted rates to rise.

Treasury bond yields now sit at their highest levels since early April. The yield on the benchmark 30-year bond was down 1 basis point yesterday, at 6.94 percent.

"As long as long-term interest rates stay below 7.25 percent, the stock market won't collapse," Mr. Canelo said.

Standard & Poor's 500-Stock Index gained 0.32, to 439.55, while the Nasdaq Combined Composite Index rose 0.73, to 676.37. The American Stock Exchange Market Value Index declined 0.45, to 427.46. Declining common stocks led advancing issues by about 8-to-7 on the New York Stock Exchange.

U.S. stocks were hurt by the University of Michigan's report that consumer confidence fell in early May. "Confidence has been coming down almost since the day Bill Clinton proposed his economic programs," said James Meyer, research director at Janney Montgomery Scott Inc.

Trading was moderate, as about 252 million shares changed hands on the Big Board.

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