Dow Tumbles 24.58 as Jobless Report Looms : Market Overview

Retrenching for the third straight session, stocks fell as the market was sapped by profit taking and caution ahead of today’s July unemployment report. The Dow Jones industrial average, down 30.26 points the two preceding sessions, fell 24.58 points to 3,340.56.

* Bond yields rose slightly as dealers trimmed positions ahead of the employment report.

* Oil futures rallied as President Bush threatened military action against Iraq.

Stocks

The market was dragged down initially by General Motors’ second-quarter earnings report. Though GM reported its best quarterly operating profit in two years, analysts are worried that slowing car sales will make things tougher on GM for the next few quarters.

Losses in IBM also continued to weigh on the market, after the company on Wednesday disclosed minimal expectations for mainframe-computer profit growth in the second half of this year.

By the close, GM was off 1 7/8 to 37 1/4 and IBM slid 2 1/8 to 88 1/4.

Overall, declining issues outnumbered advances by about 7 to 5 on the New York Stock Exchange. Big Board volume rose to 181.55 million shares from Wednesday’s 172.45 million.

“You had two leaders like IBM and GM getting knocked, and (today) we get the employment figures,” said Al Goldman, analyst at A. G. Edwards & Sons, summing up investors’ hesitant mood.

“You’re back in that market where people are very cautious and concerned about the (economic) recovery--or lack of recovery,” said trader James Volk at Charles Schwab & Co.

Still, the Dow index’s losses were exaggerated by IBM and GM. Most stocks were little changed, as evidenced by the New York Stock Exchange composite index, which dipped just 0.79 point to 231.50.

Wall Streeters expect the July unemployment report to show some improvement in the job market--mainly for technical reasons, such as summer youth jobs--but they’re wary of possible surprises.

News of either too-fast growth or a sharp decline in jobs could prompt more stock selling today, traders warn.

Among Thursday’s highlights:

* Ford and Chrysler followed GM down. Ford slumped 2 1/4 to 41 and Chrysler lost 1/2 to 21 3/8.

* Computer workstation maker Sun Microsystems added to the market’s gloom with a lousy profit report. Sun fell 1 7/8 to 25 5/8 after reporting second-quarter earnings of 37 cents a share, down from 63 cents a year ago.

* Another negative report came from British Petroleum, which tumbled 3 7/8 to 45 3/8 after reporting a second-quarter loss. The firm also halved its dividend.

* Not even the health-care sector could avoid problems Thursday: Drug firm Syntex plummeted 2 1/2 to 30 1/4 after it estimated flat to only slightly higher earnings for its fiscal fourth quarter ended July 31. The company blamed slower sales and a higher tax rate.

Another drug loser was Bolar Pharmaceuticals, which sank 2 7/8 to 9 3/4 after reporting a small second-quarter profit. The firm also said it’s withdrawing its new drug application with the FDA for its Diltiazem HC1 tablets.

* In biotech, Genzyme fell 5 1/2 to 45 3/4 after an Oppenheimer analyst downgraded the stock, citing a potential flattening of sales of its flagship drug, Ceredase.

* Among the few big winners, Epitope gained 2 1/2 to 23 3/8. The company, traded on the American Stock Exchange, said its OraSure device received regulatory clearance for commercial distribution in Mexico.

* Some retailers gained on July sales reports. Winners included Clothestime, up 1/2 to 9 1/8; Wal-Mart, up 1/2 to 57; and Kmart, up 1/2 to 25 3/8. But Ann Taylor slumped 2 to 22 1/4 on a weak sales gain.

* Food stocks saw some buying. Heinz added 1/4 to 39 3/4, Kellogg rose 3/8 to 67 1/8 and Wrigley was up 1 1/4 to 86 3/8. Soft-drink maker A&W; Brands shot up 2 to 37 1/4. A Smith Barney analyst initiated coverage of the stock with a buy rating, citing good growth prospects.

Overseas, Frankfurt’s DAX average fell 7.66 points to 1,621.15, and London’s 100-share Financial Times average slipped 15.2 points to 2,377.6.

In Tokyo, the Nikkei average lost 57.20 points to 15,926.44.

Credit

Some traders exited bonds ahead of today’s July unemployment report, fearing that a stronger-than-expected job gain could spook investors into believing that economic growth will rev soon.

The price of the Treasury’s main 30-year bond fell 7/16 point, or $4.37 per $1,000. Its yield was 7.44%, up from 7.42% Wednesday.

“A lot of people basically tried to get flat,” said Robert Brusca, economist at Nikko Securities Co. “I don’t think it was so much that people were unhappy with the (bond) market. They just didn’t want to go into the unemployment number holding a lot of bonds. There’s just too much uncertainty about the numbers.”

Also weighing on the market: next week’s auction of $36 billion in new Treasury bonds, which will boost the supply of bonds on the market. Traders were unhappy this week that the Treasury decided not to cut back.

The federal funds rate, the interest on overnight loans between banks, rose to 3.25% from 3% Wednesday.

Currency

The dollar ended mostly lower as currency dealers also awaited July’s unemployment data.

If unemployment worsens, the Federal Reserve is more likely to lower interest rates to help jump-start the recovery--a move that could further hurt the already pummeled U.S. currency.

The dollar finished at 1.478 German marks in New York, down from 1.482 Wednesday. It rose to 127.65 Japanese yen from 127.55.

Commodities

Oil futures rallied on the New York Merc, erasing Wednesday’s losses, as U.S. and Iraqi government officials exchanged angry remarks. Light sweet crude for September delivery rose 24 cents to $21.42 a barrel.

President Bush all but threatened force against Iraq unless it complies with United Nations teams inspecting suspected military sites.

Elsewhere, grain and soybean futures prices weakened further, with wheat down for the 12th straight day, as production prospects continued to improve.

“There is no doubt you’re going to have record yields in soybeans and record yields in corn. It’s just a question of how big,” said Mickey Luth, senior grains analyst with Merrill Lynch & Co. in Chicago.

On the Chicago Board of Trade, wheat for September delivery fell 1 cent to $3.09 a bushel; September corn fell 2 cents to $2.158 a bushel; September oats dropped 5.75 cents to $1.153 a bushel; and August soybeans slipped 0.50 cent to $5.53 a bushel.

Gold futures edged lower but silver futures advanced moderately on New York’s Commodity Exchange. August gold deliveries slipped 0.20 cent to $349 an ounce. September silver rose 2.5 cents to $3.92 an ounce.

Market Roundup, D6