- The Washington Times - Tuesday, October 25, 2005

NEW YORK (AP) — Wall Street closed lower in profit-taking yesterday after the previous session’s big gain, though the market held on reasonably well despite a surprising drop in consumer confidence and a disappointing forecast from Texas Instruments Inc.

The major indexes were down for much of the day, then recovered most of their losses in late trading. Still, the market’s give and take reflected the unknowns facing investors.

Wall Street remained gratified by the nomination of Bush administration economist Ben Bernanke to succeed Alan Greenspan as head of the Federal Reserve Board, but continued to worry about inflation in the face of slow economic growth and warnings of declining fourth-quarter sales or profits from major companies like Texas Instruments.

Stocks were further pressured as the Conference Board reported that its consumer confidence index fell to 85 in October, down from 86.6 in September and less than the 88 reading economists had expected. The unexpected drop raised new concerns about consumer spending just a month before the start of the holiday shopping season.

The Dow fell 7.13, or 0.07 percent, to 10,377.87, having lost more than 68 points earlier in the session.

Broader stock indicators were modestly lower. The Standard & Poor’s 500 Index dropped 2.84, or 0.24 percent, to 1,196.54, and the Nasdaq Composite Index lost 6.38, or 0.3 percent, to 2,109.45.

Bonds added to Monday’s sharp losses, with the yield on the 10-year Treasury note rising 4.51 percent from 4.45 percent late Monday. The dollar was lower against most major currencies, while gold prices rose.

Oil prices rebounded sharply after losing ground in the previous trading session, adding to investors’ worries. A barrel of light crude settled at $62.44, up $2.12, on the New York Mercantile Exchange.

In other economic news, existing home sales for September, reported by the National Association of Realtors, were steady at an annualized rate of 7.28 million homes, slightly higher than expected. However, the increase was due to higher demand for new homes among refugees from Hurricane Katrina; without that demand, sales would have fallen.

While third-quarter earnings from Texas Instruments rose 12 percent from the year-ago quarter, the company’s revenue forecasts for the fourth quarter were weaker than expected. That led Bear Stearns analysts to downgrade the company’s stock. Texas Instruments dropped $2.37, or 7.7 percent, to $28.55.

“Obviously, with the Nasdaq leading losses, Texas Instruments’ problems are bleeding through to the rest of the tape,” said Brian Williamson, an equity trader at the Boston Company Asset Management LLC. “It was just enough negativity to push us over the edge and fuel some of this profit-taking we’re seeing here.”

DuPont Co. gained $1.18 to $40.80 after one-time charges related to hurricane damage and taxes. The chemical maker also announced a $5 billion stock buyback program.

Earnings at International Paper Co. rose sharply in the third quarter on proceeds from the sale of an Australian forest products company and a tax settlement. Despite materials and energy costs, the company surpassed analysts’ earnings expectations by 9 cents per share. International Paper nonetheless lost 37 cents to $28.

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