Newspaper article THE JOURNAL RECORD

Stocks Decline with Bond Market

Newspaper article THE JOURNAL RECORD

Stocks Decline with Bond Market

Article excerpt

NEW YORK (AP) _ Stocks tumbled with the bond market on Monday amid renewed investor concern about inflation and interest rates.

Smaller company stocks, however, fared better than blue-chip issues, with good performance by software and other computer issues shoring up the Nasdaq index.

The Dow Jones industrial average dropped 23.94 points to 3,742.41.

Declining issues outnumbered advances by about 4 to 3 on the New York Stock Exchange.

Volume on the floor of the Big Board came to 249.40 million shares as of 4 p.m., down from 293.33 million in the previous session.

From the opening the broad market took its cue from bonds, heading steadily downward until late in the session, when the Dow average and other stock market indicators recovered slightly. At one point, the blue-chip indicator was down about 40 points.

Stock investors balked at the higher interest rates that accompanied declining bond prices. Higher rates make share prices less appealing relative to interest-bearing investments and increase the cost of money to corporations.

The Treasury's bellwether's 30-year bond lost more than 1 points, pushing its yield up to 7.43 percent.

Bonds, analysts said, responded to a sharp rise in the Knight-Ridder Commodity Research Bureau Index, which rallied 4.67 points to 238.36.

The last time the index reached that level was Oct. 1990, according to Bob Hafer, research director for the bureau. The index has not risen so much in one day since July 6 last year, he said.

In addition, gold and silver prices rose sharply. They, along with other commodity prices, are seen by many investors as indicators of future inflation. Many investors use commodities as hedges against cost-of-living increases.

"The higher commodity prices are saying we have an inflation scare here," said Michael Metz, investment strategist at Oppenheimer Co. …

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