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Slumping Dow shares pain

Tampa Bay companies hit hard in three-day slide.

By Times staff and wires
Published June 8, 2007

NEW YORK - Wall Street fell sharply for a third straight session Thursday after rising bond yields deflated hopes for an interest rate cut later in the year. The Dow Jones industrials fell nearly 200 points and the S&P 500 index fell below the 1, 500 mark.

The yield on the Treasury's 10-year note passed 5 percent Thursday, reaching a close of 5.13 percent in New York, its highest point since mid July. The move unnerved investors who contend the Federal Reserve won't cut short-term interest rates.

The Dow fell 198.94, or 1.48 percent, to 13, 266.73, bringing its three-day loss to about 410 points. It was the biggest three-session decline since stock markets began a short-lived pullback on Feb. 27. All 30 stocks in the blue-chip average lost ground Thursday.

Many Tampa Bay companies have felt the pain of the sell-off. Walter Industries of Tampa and Jabil Circuit of St. Petersburg have lost more than 8 percent of their value over the past three days.

Other companies with big drops include TECO Energy of Tampa and Raymond James Financial of St. Petersburg, both of which are down more than 5 percent.

In dollar terms among local stocks, WellCare Health Systems was the biggest loser, having fallen $2.85 a share over three days, to $88.79, followed by Walter, which fell $2.66 to $29.31.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 26.66, or 1.76 percent, to 1, 490.72, and the Nasdaq composite index fell 45.80, or 1.77 percent, to 2, 541.38.

For the week, the Dow is down 2.94 percent, while the S&P 500 is off 2.97 percent and the Nasdaq is down 2.78 percent. Prior to the slide that began Tuesday, the Dow was up 9.7 percent for the year, while the S&P and Nasdaq were up about 8.5 percent. Both the Dow and the S&P had record closes as recently as Friday.

Bonds fell sharply, with the yield on the benchmark 10-year Treasury note jumping to 5.13 percent late Thursday from 4.97 percent late Wednesday. Some market watchers say the yield is likely to climb higher as bond prices weaken, making it harder for consumers and companies to borrow money.

Interest rates held investors' attention Thursday after two sessions in which unease over inflation helped push stocks lower. Investors are concerned the Fed, which has stood pat on interest rates recently, could raise interest rates to combat inflation.

Some observers saw the concerns about interest rates as overblown.

"Historically, we're at lows, " said Michael Church, portfolio manager at Church Capital Management, referring to interest rates. "I don't think 5 percent is some sort of hard-and-fast number where this market turns. I don't think 5 percent is going to compel people to take money out of equities."

Times staff writer Helen Huntley contributed to this report.

[Last modified June 7, 2007, 23:12:25]