Equity sell-off continues as bond prices rise

Speculation about tomorrow’s
retail report in the U.S. suggests
sales are up and producer prices
higher. It is the first clear sign
that inflation may have finally
infected the U.S. economy. Oil
prices jumped to US$23 a barrel
today after the American Petrol
Institute reported that inventory
of crude is low. Analysts are
more convinced now that the U.S.
Fed will move to bump up interest
rates by another quarter point on
November 16.

Consequently, bond prices
continued to rise today. The yield
on the 30-year bond floated up
another 8 basis points, to
6.29%, it’s highest level in
close to two years.

The Dow dropped 184.90 to
10,232.16. The share price
losses were widespread. On the
NYSE, losers beat out winners
by 22 to 9. Above-average losses
were seen in the interest
rate brokerages and banks. For
example, Charles Schwab Corp.
lost US$3.69 to 28.06.
Bear Stearns and Co. lost
US$2.75 to $37.50, partly due to
lower-than-expected earnings in
its third quarter.

Tech stocks were also hit hard.
Intel lost $4.19, also on lower
corporate earnings reports.
Nasdaq plummetted 70.97 to
2,801.46. Losers beat out
winner by 2:1.

Canadian markets fared a
little better because rising oil,
gold and metal prices buoyed
some equities. Those were the
only subsectors showing any
growth at one point today.
The TSE still closed 98.03 lower,
to 7,037.01. Nortel stocks
in particular deflated by C$3.55
to $82.20. The ME closed at
3,696.46, 50.92 points lower
than its opening number.

Both western exchanges were
heading south in late Pacific
trading as well. The ASE was
off by 12 points. The VSE had
shaved off 4.05 points, to
416.57.