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Stocks Sink Again; T-Bond Yields Climb

April 17, 2001|From Times Staff and Wire Reports

Stocks ended mostly lower Monday as investors returned from the three-day holiday weekend to face some downbeat earnings reports--and another surge in Treasury bond yields.

The tech sector, which had begun to rally last week, was hit by more bad news after trading ended, as Cisco Systems revised already-depressed earnings estimates lower.

Tech issues were weak even before the Cisco news, as semiconductor stocks fell anew. The Nasdaq composite index slid 51.86 points, or 2.6%, to 1,909.57, its first loss in five sessions. The battered index had rebounded 14% last week.

The Dow Jones industrials managed to inch up 31.62 points, or 0.3%, to 10,158.56, but most other major stock indexes fell. Losers topped winners by 17 to 13 on the New York Stock Exchange and by 23 to 16 on Nasdaq, though trading was light.

A number of major banks reported first-quarter earnings Monday, and bank stocks in general ended the day lower--unable to see a bounce even though First Union announced it will buy rival Wachovia, in the latest financial mega-merger.

Financial stocks also may have been under pressure because of the continuing rise in bond yields. Treasury yields rose for a fifth straight session as traders and investors increasingly appear to be questioning how many more interest rate cuts may be coming from the Federal Reserve.

The 10-year T-note yield, a benchmark for mortgage rates, rose to 5.25%, up from 5.16% Thursday and 4.93% a week ago. (Markets were closed Friday in observance of Good Friday.)

The three-month T-bill rate rose to 4.15% from 4.02% Thursday and 3.94% a week ago.

A raft of economic data this week could send yields higher if investors sense that the economy isn't getting weaker, some analysts say.

But some money managers remain bullish on bonds. "The sentiment has turned bearish, but I wouldn't sell Treasuries here because I'm not convinced the Fed is done" cutting rates, Michael Cheah, who manages $1.5 billion at SunAmerica Asset Management, told Bloomberg News.

In foreign trading Monday, the specter of a currency devaluation in neighboring Argentina and corruption allegations against the president of Brazil's Senate pushed the Brazilian real to a new low against the dollar.

The real closed at 2.196 to the dollar, the weakest finish ever for the currency that was created in mid-1994 as part of an economic stabilization plan that put an end to triple-digit inflation.

Latin American stock markets were broadly lower. Brazil's main index fell 3.5% while the Mexican market lost 0.8%.

Among Monday's highlights:

* Semiconductor stocks led Nasdaq lower after brokerage Morgan Stanley downgraded key issues. But tech was weak across the board, as some investors cashed out after last week's gains.

Losers included Apple, down 98 cents to $21.44; Qualcomm, down $4.67 to $48.37; JDS Uniphase, down $1.89 to $19.90; Microsoft, down $1.39 to $60.79; and DoubleClick, down $1.58 to $10.43.

But Yahoo rose 66 cents to $17.62 and IBM added 55 cents to $96.75.

* Brokerage shares were weak. Merrill Lynch lost $1.80 to $60.55 and Charles Schwab fell 64 cents to $18.

* Energy stocks were strong as crude oil and gasoline futures prices continued to rise. Exxon Mobil rose $2.55 to $84.55, helping to boost the Dow index. Other winners included Anadarko Petroleum, up $2.96 to $68.31, and Valero Energy, up $2.35 to $42.95.

* Some consumer-related stocks attracted buyers. Philip Morris added 67 cents to $46.56, Pepsico gained 29 cents to $42.20 and Adolph Coors rose $1.83 to $61.13.

Market Roundup: C13-14

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