Stock Prices Follow Bond Drop
NEW YORK (AP) -- Stock prices declined Monday in sympathy with bonds, amid concerns that economic strength might prod interest rates higher.
The Dow Jones industrial average fell 28.85 points to close at 5,693.89. But a rise in tobacco stocks blunted losses among blue chips, after an Indiana jury ruled in the industry's favor late last week on a smoking liability lawsuit.
Declining issues led advancers by 3 to 2 on the New York Stock Exchange, but volume was the second lowest for a full session this year at 281.41 million shares, off significantly from Friday's pace.
Broad-market indexes also fell. The NYSE's composite index fell 1.34 to 355.89, the Standard & Poor's 500-stock index declined 3.15 to 663.88, the Nasdaq composite index lost 3.83 to 1,139.22, and the American Stock Exchange's market value index eased 0.32 to 560.62.
Traders and analysts described a typically slow late-summer session, with many market players out on vacation and remaining investors groping for something upon which to hang their trades.
Weaker bonds provided a slight impetus to sell. The benchmark 30- year Treasury bond lost 9-16 point, pushing its yield up to 6.99 percent from 6.94 percent Friday.
Investors send bond prices lower amid worries that the economy is growing fast enough to prompt the Federal Reserve to raise interest rates as a way to head off inflation.
After markets closed Friday, the Federal Reserve released minutes of its July policy meeting indicating that at least one member, Minneapolis Federal Reserve President Gary Stern, believes interest rates should be raised.
Two real estate reports released on Monday did nothing to assuage the fear of a tightening. The Commerce Department said U.S. building permits rose by an annual rate of 3 percent in July, more than the expected rise of 2.6 percent.
And the National Association of Realtors said sales of existing single-family homes fell slightly from a revised June figure, but it was higher than any month of 1995. …