- The Washington Times - Tuesday, December 20, 2005

NEW YORK (AP) — Stocks fell in a volatile session yesterday, with a sharp decline in General Motors Corp. dragging down the Dow Jones Industrial Average while broader indexes fell slightly in an end-of-year malaise.

General Motors fell to its lowest level since the crash of 1987 after a report by J.D. Power and Associates said the automaker was losing market share to its Asian rivals.

Broader indexes moved lower, despite a bullish report on wholesale inflation, an uptick in home construction for November and a strong earnings report by Wall Street firm Morgan Stanley.

Traders are especially concerned about future Federal Reserve interest rate increases and oil prices.

A strike by New York City transit workers had little effect on volume, which was even with Monday’s shares traded.

The Dow Jones Industrial Average fell 30.98, or 0.29 percent, to 10,805.55.

Broader stock indicators were slightly lower. The Standard & Poor’s 500 Index fell 0.30, or 0.02 percent, to 1,259.62, and the Nasdaq Composite Index fell 0.32, or 0.01 percent, to 2,222.42.

Bonds moved lower, with the yield on the 10-year Treasury note rising to 4.47 percent from 4.44 percent late Monday. The dollar rose against most major currencies, while gold prices were mixed. Crude oil futures edged higher ahead of today’s weekly inventory data, with a barrel of light crude quoted at $57.70, up 64 cents, on the New York Mercantile Exchange.

In economic news, a jump in home construction last month helped ease worries about the cooling housing market. Housing starts rose to an annualized rate of 2.123 million homes in November, up from October’s rate of 2.014, according to the Commerce Department. The number of permits issued also rose to an annualized rate of 2.155 million last month, up from 2.103 million the previous month.

The increase may have been due to November’s warm weather, UBS economist Maury N. Harris wrote in a research note.

The Labor Department’s Producer Price Index for November, which measures inflation, showed overall producer prices fell 0.7 percent for the month as energy prices declined. Economists had expected a 0.5 percent drop.

Even with energy prices removed, “core” PPI rose just 0.1 percent, versus the 0.2 percent rise expected on Wall Street.

With inflation remaining relatively tame, the Federal Reserve is considered more likely to halt its current regime of rate increases soon.

In company news, General Motors stock fell $1.20, or 5.7 percent, to $19.85, its lowest level since October 1987. Along with the report saying the company was losing market share, GM also recalled more than 400,000 vans because of faulty seat belts.

Morgan Stanley’s record quarter sent its shares up $1.04 to $57.71. The company’s quarterly earnings surpassed Wall Street’s forecasts by 34 cents per share before a one-time tax benefit.

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