Investors Take Time Out to Get Their Bearings

Wall Street ended a listless session with stocks nearly flat Thursday as many investors kept to the sidelines amid worries about interest rates, oil prices and geopolitical issues.

A new batch of data showed that the economy’s rapid growth might be cooling a little, raising a twinge of doubt about the expected Federal Reserve interest rate hike next month and pushing bond yields lower.

The dollar gained against the euro and other major currencies but slipped against the yen. Oil prices eased, with near-term futures in New York falling 58 cents to $40.92 a barrel.

As volume on the New York Stock Exchange set a new low for the year, the Dow Jones industrial average traded in a narrow range all day and finished off 0.07 point at 9,937.64.

Broader stock indicators also barely moved. The Standard & Poor’s 500 index gained 0.51 point to 1,089.19, while the Nasdaq composite was down 1.58 points at 1,896.59.

Rising stocks outnumbered losers by less than 3 to 2 on the New York Stock Exchange. Losers had a 4-3 edge on Nasdaq.

Investors concerned with an overheating economy may have been soothed as the Conference Board issued a lower-than-expected reading for its index of leading economic Indicators. The index, which predicts the strength of the economy up to six months ahead, rose 0.1% in April. Economists had been expecting a 0.2% rise.

The labor market, a key factor in any Fed decision on interest rates, remained somewhat strong even as jobless claims climbed: Initial jobless claims rose by 12,000 to 345,000 for the week ended Saturday, the government said.

Although economists had forecast 326,000 first-time unemployment filings for the week, the higher number wasn’t viewed as a sign that hiring was halting.

In the end, the various economic readings may keep stocks in a narrow range until the Fed decides to act, analysts said. The central bank will meet in late June.

“What’s struggling to occur is a consensus of opinion of what really is going to happen,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers.

The hints that the economy may be cooling pushed Treasury prices higher, causing their yields to fall. The benchmark 10-year T-note yield fell to 4.70% from 4.77% on Wednesday.

In other Treasury news, Under Secretary Brian Roseboro said the government would not resume auctions of 30-year bonds despite demand for such long-term debt. The Treasury stopped issuing the bonds more than three years ago.

In stocks, a new merger in the networking business helped boost some tech shares. Network company Tellabs said it would acquire Advanced Fibre Communications for $1.9 billion in cash and stock. AFC gained $2.13 to $18.96, while Tellabs was down $1.24 at $7.95.

Rival pet supply retailers Petsmart and Petco Animal Supplies both announced quarterly earnings. Petsmart reported surging profit that beat analysts’ estimates by 3 cents a share, while Petco’s higher-margin sales and store expansion allowed the company to beat expectations by 2 cents a share.

Petsmart rose $2.14 to $28.40, while Petco added 8 cents to $28.61.

Among other market highlights:

* Delta, the third-largest U.S. carrier, rose 82 cents to $5.99. The 16% gain was the biggest in the S&P; 500. Delta shares may be worth as much as $10 if the company reaches an agreement with pilots that will give it time to improve its business, Lehman Bros. analyst Gary Chase said in a note to clients. He raised his rating on the stock to “overweight” from “equal weight.”

Other airlines also jumped. Continental rose 43 cents to $9.91 and AMR, parent of American, gained 46 cents to $11.

* Navistar plunged $6.25 to $33.96. The 16% drop was the steepest in the S&P; 500. The truck-making company expects fiscal third-quarter profit of 60 cents to 70 cents a share, less than the 99 cents analysts had forecast, according to the average estimate in a survey of analysts by Thomson First Call.

* Synopsys added $2.95, or 12%, to $28.27. The maker of software to design computer chips said it expected profit in the current quarter to exceed analyst estimates. The company canceled an acquisition that would have lowered earnings on a per share basis, said Raj Seth, an analyst at SG Cowen Securities Corp.

* Pharmion surged $12.91 to $39.91. The company said its Vidaza drug to treat a cancer-like bone-marrow illness was approved by the U.S. Food and Drug Administration. Pharmion will have as much as a seven-year monopoly on treating the disease because Vidaza combats a relatively rare condition, with fewer than 200,000 patients.

* McDonald’s fell 44 cents to $25.31. A blast occurred in a parking lot outside a McDonald’s restaurant in Istanbul, Turkey. In Rome, Italian police found two firebombs at a McDonald’s restaurant, news agency Agence France-Presse reported, citing police officials.

* Taser International fell $1.31 to $28.51. Seven of the 10 largest local U.S. police departments have put limits on the deployment of the electronic stun weapons Taser manufactures and don’t plan to provide them to all uniformed officers, according to a Bloomberg News survey. Taser shares have plunged from a peak of $59 in April.

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Market Roundup, C5