NEW YORK (AP) — Wall Street tumbled yesterday as Federal Reserve Chairman Alan Greenspan, confirming investors’ fears about interest rates, hinted in congressional testimony that a rate increase is indeed expected. The Dow Jones Industrial Average lost more than 120 points as the market’s earlier gains evaporated.
Few analysts were surprised by Mr. Greenspan’s remarks, but his suggestion that banks could weather a rise in rates sparked a sell-off, sending the major indexes plummeting in the final hour of what had been a lackluster session. It also erased earlier gains on solid earnings reports from Dow components General Motors Corp., Pfizer Inc. and Altria Group Inc.
The Dow shed 123.35, or 1.2 percent, to close at 10,314.50.
The broader gauges also were lower. The Nasdaq Composite Index sagged 41.80, or 2.1 percent, to 1,978.63. The Standard & Poor’s 500 index declined 17.67, or 1.6 percent, to 1,118.15.
Providing evidence that the economy is improving, most companies have reported first-quarter earnings that were at or above Wall Street’s expectations. Analysts surveyed by Thomson First Call forecast an average 17 percent rise in profits for the S&P 500.
General Motors rose $1.62 to $47.77, having topped expectations with strong results at its financing arm and improved business in Asia. Automotive operations in North America and Europe continued to be hampered by intense pricing pressure, however.
Pfizer was down 88 cents at $36.70 after reporting a 50 percent drop in net income on charges related to its acquisition of Pharmacia Corp. last year. But the results still beat analysts’ expectations and revenues jumped 47 percent.
Altria Group, the parent company of Philip Morris and Kraft Foods Inc., fell 12 cents to $56.33 after reporting a slight rise in first-quarter profits attributed to the strength of its tobacco business.
Kraft Foods lost 12 cents to $31.27 after reporting first-quarter profits that tumbled 34 percent amid continuing restructuring costs at the nation’s largest food company. Excluding the charges, the company would have beaten expectations.
Industrial manufacturer Ingersoll-Rand was down $1.19 at $70.81 after beating Wall Street expectations with a 17 percent rise in first-quarter profits as nearly all its businesses posted double-digit revenue increases.
Declining issues outnumbered advancers about 3-to-1 on the New York Stock Exchange. Volume was moderate, with 1.51 billion shares traded, compared with 1.19 billion on Monday.
The Russell 2000 Index, which tracks smaller-company stocks, was down 11.14, or 1.9 percent, at 575.81.
Overseas, Japan’s Nikkei stock average finished 1.6 percent higher. In Europe, France’s CAC-40 added 0.8 percent, Britain’s FTSE 100 gained 0.5 percent, and Germany’s DAX index closed up 0.9 percent.
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