Dow Jones and Nasdaq Fall on Inflation Worries
Stocks fell Wednesday after consumer prices showed a larger-than-expected increase in January, touching off concerns that inflation might not dissipate as Wall Street has hoped.
Only last week Wall Street cheered and logged sharp advances after Federal Reserve Chairman Ben Bernanke offered his assessment during Capitol Hill testimony that inflation appeared to be moderating as the economy was showing sustainable growth. Investors hope to gain insight into the central bank's recent thinking when minutes from the Fed's last meeting are released Wednesday afternoon.
The Labor Department report that the consumer price index rose 0.2 percent in January came as a surprise to Wall Street, which had expected an 0.1 percent increase. Declines in energy prices couldn't fully offset a rise in costs of medical care, food and airline tickets. The core figure, which excludes often volatile food and energy prices, rose a greater-than-expected 0.3 percent. The inflation news followed a profit report from Hewlett-Packard Co. that damped sentiment on Wall Street.
"We find it hard to see how the economy can continue to do well as it has without interest rates being under some upward pressure and if interest rates do stay where they are or in fact go down it's probably because the economy will slow down," said Denis Amato, chief investment officer at Ancora Advisors.
In late morning trading, the Dow Jones industrial average fell 62.89, or 0.49 percent, to 12,723.75.
Broader stock indicators were lower. The Standard & Poor's 500 index was down 4.78, or 0.33 percent, at 1,454.90, and the Nasdaq composite index fell 4.09, or 0.16 percent, to 2,508.95.
Bonds fell following the inflation data; the yield on the benchmark 10-year Treasury note rose to 4.70 percent from 4.68 percent late Tuesday. The dollar was mostly lower against other major currencies, though it rose against the yen after the Bank of Japan increased interest rates. Gold prices rose.
Light, sweet crude rose 51 cents to $59.36 per barrel on the New York Mercantile Exchange.
"The market has been in this Goldilocks phase where everything is perceived as positive," Amato said. "We have a hard time seeing how you could have steady-to-lower rates along with a good economy and better earnings."
In corporate news, Hewlett-Packard fell $1.83, or 4.2 percent, to $41.30 after the printer and computer maker saw inventories increase during its fiscal first quarter. Sales and profits topped Wall Street's forecasts for the quarter.
Pharmacyclics Inc. plunged $2.04, or 40.5 percent, to $3 after the pharmaceutical company said the Food and Drug Administration refused to review clinical studies of Xcytrin, an injection for treating lung cancer that has spread to the brain. The agency cited an improperly filed application, the company said.
Novastar Financial Inc. fell $6.90, or 39.3 percent, to $10.66 after the mortgage lender swung to a fourth-quarter loss from a profit as it booked charges for loans it expects borrowers with bad credit won't be able to repay. The company also said it might have to revoke its status as a real-estate investment trust, a vehicle that pays most of its taxable income to shareholders via a dividend.
FuelCell Energy Inc. jumped 23 cents, or 3.1 percent, to $7.76 after the maker of fuel cell power equipment expanded a manufacturing agreement with Posco Power, the largest privately controlled power producer in South Korea.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 478 million shares.
The Russell 2000 index of smaller companies was down 1.04, or 0.13 percent, at 825.07.
Overseas, Japan's Nikkei stock average closed down 0.14 percent. In afternoon trading, Britain's FTSE 100 was down 0.84 percent, Germany's DAX index was down 0.55 percent, and France's CAC-40 was down 0.41 percent.
Published by Tim Paradis, AP Business Writer
Only last week Wall Street cheered and logged sharp advances after Federal Reserve Chairman Ben Bernanke offered his assessment during Capitol Hill testimony that inflation appeared to be moderating as the economy was showing sustainable growth. Investors hope to gain insight into the central bank's recent thinking when minutes from the Fed's last meeting are released Wednesday afternoon.
The Labor Department report that the consumer price index rose 0.2 percent in January came as a surprise to Wall Street, which had expected an 0.1 percent increase. Declines in energy prices couldn't fully offset a rise in costs of medical care, food and airline tickets. The core figure, which excludes often volatile food and energy prices, rose a greater-than-expected 0.3 percent. The inflation news followed a profit report from Hewlett-Packard Co. that damped sentiment on Wall Street.
"We find it hard to see how the economy can continue to do well as it has without interest rates being under some upward pressure and if interest rates do stay where they are or in fact go down it's probably because the economy will slow down," said Denis Amato, chief investment officer at Ancora Advisors.
In late morning trading, the Dow Jones industrial average fell 62.89, or 0.49 percent, to 12,723.75.
Broader stock indicators were lower. The Standard & Poor's 500 index was down 4.78, or 0.33 percent, at 1,454.90, and the Nasdaq composite index fell 4.09, or 0.16 percent, to 2,508.95.
Bonds fell following the inflation data; the yield on the benchmark 10-year Treasury note rose to 4.70 percent from 4.68 percent late Tuesday. The dollar was mostly lower against other major currencies, though it rose against the yen after the Bank of Japan increased interest rates. Gold prices rose.
Light, sweet crude rose 51 cents to $59.36 per barrel on the New York Mercantile Exchange.
"The market has been in this Goldilocks phase where everything is perceived as positive," Amato said. "We have a hard time seeing how you could have steady-to-lower rates along with a good economy and better earnings."
In corporate news, Hewlett-Packard fell $1.83, or 4.2 percent, to $41.30 after the printer and computer maker saw inventories increase during its fiscal first quarter. Sales and profits topped Wall Street's forecasts for the quarter.
Pharmacyclics Inc. plunged $2.04, or 40.5 percent, to $3 after the pharmaceutical company said the Food and Drug Administration refused to review clinical studies of Xcytrin, an injection for treating lung cancer that has spread to the brain. The agency cited an improperly filed application, the company said.
Novastar Financial Inc. fell $6.90, or 39.3 percent, to $10.66 after the mortgage lender swung to a fourth-quarter loss from a profit as it booked charges for loans it expects borrowers with bad credit won't be able to repay. The company also said it might have to revoke its status as a real-estate investment trust, a vehicle that pays most of its taxable income to shareholders via a dividend.
FuelCell Energy Inc. jumped 23 cents, or 3.1 percent, to $7.76 after the maker of fuel cell power equipment expanded a manufacturing agreement with Posco Power, the largest privately controlled power producer in South Korea.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 478 million shares.
The Russell 2000 index of smaller companies was down 1.04, or 0.13 percent, at 825.07.
Overseas, Japan's Nikkei stock average closed down 0.14 percent. In afternoon trading, Britain's FTSE 100 was down 0.84 percent, Germany's DAX index was down 0.55 percent, and France's CAC-40 was down 0.41 percent.
Published by Tim Paradis, AP Business Writer
posted by Stock Administrator @ 12:04 PM
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