Market reacts to housing report
A report that new-home sales surged in May derailed investors' hopes for an interest rate cut and sent bonds sharply lower Thursday, but stocks survived relatively unscathed.
The Dow Jones industrial average ended 6.23 points lower at 4,550.56, having recouped nearly all of a 34-point drop posted earlier in the day.
Stocks buckled as the bond market plunged, with the 30-year Treasury down nearly 2 points late in the day, or $20 for each $1,000 invested.
The rout in the bond market was sparked by a Commerce Department report that said new-home sales shot up 19.9 percent in May.
Many investors had counted on continued sluggish economic indicators to prod the Federal Reserve to lower short-term interest rates soon. But analysts said the housing data made it less likely that the Fed will ease rates at a policymaking meeting that begins Wednesday.
MORTGAGE RATES UNCHANGED. Thirty-year, fixed-rate mortgages averaged 7.53 percent this week, unchanged from last week, according to a national survey released Thursday by the Federal Home Loan Mortgage Corp. On one-year adjustable rate mortgages, lenders were asking an average initial rate of 5.84 percent, unchanged from last week. Fifteen-year mortgages averaged 7.03 percent this week, up from 7.01 percent a week earlier. The rates do not include add-on fees known as points.
$50-MILLION AWARDED IN HARASSMENT CASE. A woman who accused her supervisor at Wal-Mart of sexually harassing her was awarded more than $50-million this week. Peggy Kimzey, 47, testified in Jefferson City, Mo., that Bud Brewer made numerous crude sexual remarks to her and other female employees about female anatomy and tight clothing. She resigned from Wal-Mart in 1993. Wal-Mart will appeal the ruling, said a statement issued from its headquarters in Bentonville, Ark.
HOUSE PANEL VOTES TO GUT FAIR-LENDING RULES. A House committee has approved a measure that would gut federal fair-lending rules and let banks buy insurance companies. President Clinton has said he will veto the bill because it exempts most of the country's banks from the Community Reinvestment Act. That law requires banks to lend money in all communities where they take deposits. The insurance provision of the bill also could stir controversy. It could lead to a consolidation of the financial services industry as banks scurried into insurance, a business from which they are now generally barred.
RECEIVER NAMED FOR BLOCH NETWORK. A federal judge has appointed a receiver to oversee operation of the Clearwater-based radio network of indicted radio talk show host Sonny Bloch. Receiver Michael Eskridge, a former president of NBC radio, said Thursday he is analyzing Bloch's Independent Broadcasters Network and will likely make a recommendation within the next month on what to do with the company, which operates WBDN 760-AM in Brandon and two other stations. "We'll be trying to recover whatever is possible to recover for investors," Eskridge said. Bloch, who lived in Tampa, was indicted in New Jersey this month on charges that he bilked listeners and investors out of nearly $21-million.
DANKA EXPANDS. St. Petersburg-based Danka Business Systems PLC said Thursday it has agreed to buy Reprotechniek Group Benelux, a large distributor of Toshiba-brand copiers and faxes in the Netherlands, Belgium and Luxembourg, for $18.2-million. The acquisition would be Danka's first in continental Europe and is expected to boost company sales in Europe by 50 percent to about $159-million.
DOW DOLLAR YIELD
30 industrials vs. Japanese yen 30-year U.S. bond
4550.56 84.44 6.64
-6.23 -1/24 +0.13