Stocks Mixed as Yields, Commodities Slump

Stocks struggled to a mixed finish Tuesday after an early rally, as a drop in bond yields wasn’t enough to keep buyers interested.

Meanwhile, Dell Computer’s earnings report after trading ended Tuesday could set the scene for trouble in the tech sector today.

In other markets, the dollar soared against the Japanese yen as Japan all but begged currency traders to push the yen down to help the economy.

And commodity prices slumped anew, led by oil prices.

On Wall Street, traders returned from the holiday weekend to push the Dow up as much as 113 points early on, but the blue-chip index faded by the close to a gain of 22.14 points, at 9,297.03.

The Nasdaq composite index also rallied early, then slumped toward the close to finish with a loss of 8.02 points at 2,313.87. The index has fallen 7.8% from its recent peak reached Feb. 1.

Winners and losers were nearly evenly matched on the New York Stock Exchange, while trading volume was the lightest this year.

After a stunning rally from October to mid-January, stocks have struggled in recent weeks as bond yields have risen, reflecting the U.S. economy’s surprising strength.

On Friday, the bellwether 30-year Treasury bond yield jumped to 5.42%, its highest since late August. On Tuesday, however, yields pulled back, with the 30-year yield falling to 5.35%.

U.S. yields were helped by a slide in Japanese bond yields overnight, after the Finance Ministry said it will buy bonds in the market this month and next, after stopping such purchases last month.

Japanese government debt issuance is soaring as part of a program to spend the country out of recession. But that also has pushed yields there higher.

On Tuesday, the benchmark 10-year Japanese bond yield fell to 2.09%, from 2.25% on Monday.

What’s more, the dollar zoomed 3.21 yen to 118.74 yen after Finance Minister Kiichi Miyazawa, senior Ministry of Finance official Eisuke Sakakibara and Bank of Japan Gov. Masaru Hayami all said they welcome any decline in the yen caused by the central bank’s short-term interest rate cut Friday.

A weaker yen will make Japanese exports cheaper abroad--and will make U.S. bonds more attractive to Japanese investors.

On Wall Street, the focus near-term will be on techs after Dell’s earnings report, which showed weaker-than-expected sales.

What’s worrisome for the market is that tech has been the hottest sector of all during the last year. If those stocks turn down, the market’s recent stall could turn into a rout, some analysts say.

Among Tuesday’s highlights:

* Leading tech stocks were mixed ahead of Dell’s earnings report, with Intel off 13 cents to $126.38, IBM down 25 cents to $172.50 and Sun Microsystems unchanged at $100.44.

But Hewlett-Packard tumbled $5.94 to $70.50 in late trading after its quarterly report also signaled disappointing sales growth.

* Internet stocks were mostly lower, with EBay falling $4.88 to $231.13, Yahoo down $17.63 to $133.38 and Lycos off $7.50 to $92.

* On the plus side, retailer Wal-Mart Stores hit a record high, gaining $3.19 to $87.56 after its strong earnings report--a reflection of U.S. consumers’ robust spending.

Other retailers advancing included Abercrombie & Fitch, up $3.44 to $78; Nordstrom, up $1.19 to $40.63; and Dayton Hudson, up $3.19 to $63.75.

* Truck maker Navistar leaped $7.13 to $42.38 on word it is in merger talks with Volvo.

* USA Talks.com, whose shares resumed trading Friday after a two-week Securities and Exchange Commission-mandated halt, closed at $5, down from $5.63 on Friday. The Friday close was revised by Nasdaq, which originally reported the price as $1.

In commodity trading, prices overall continued to get cheaper Tuesday as global gluts show no sign of dissipating.

Heating oil futures fell almost 3% to their lowest price ever on expectations that temperatures in the final weeks of winter will be too warm to ease a surplus.

Crude oil declined in sympathy, with near-term futures falling 51 cents, or 4.3%, to $11.37 a barrel.

In other markets, coffee fell 5% to a three-year low, and copper reached a 12-year low. The CRB/Bridge index of 17 commodities fell 1.3% to its lowest close since July 2, 1975.

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Market Roundup, C9