- The Washington Times - Friday, February 17, 2006

NEW YORK (AP) — A late-day sell-off left stocks modestly lower yesterday as weakening consumer confidence and a rise in wholesale prices prompted investors to take profits and pause from Wall Street’s recent rebound. The major indexes gained for the week.

The market’s losses also were fed by soaring energy prices and a meager profit forecast from Dell Inc. Also, the upswing in the producer price index — seen as a precursor to consumer-level inflation — once again sparked concerns about more interest-rate increases, a day after one Federal Reserve member said the central bank was nearing an end to its string of rate rises.

“The PPI number is one data point that suggests the Fed is going to go further,” said Russ Koesterich, senior portfolio manager at Barclays Global Investments. With six weeks before the next Fed policy meeting, “the market is going to pay increasing attention to the implication of [economic] data for inflation.”

Investors digested a 0.3 percent rise in January’s PPI, which grew faster than economists’ 0.2 percent target. Core PPI — excluding volatile energy and food prices — added 0.4 percent, the Labor Department said.

The Dow fell 5.36, or 0.05 percent, to 11,115.32, after losing as much as 42 points earlier.

The broader stock indicators also declined. The Standard & Poor’s 500 index lost 2.14, or 0.17 percent, to 1,287.24, and the Nasdaq Composite Index slid 12.27, or 0.53 percent, to 2,282.36.

The Russell 2000 index of smaller companies fell 0.98, or 0.13 percent, to 730.94.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.54 percent from 4.59 percent late Thursday. The dollar was mostly lower against most major currencies, while gold prices advanced.

Crude-oil futures rallied on threats of political unrest in the oil-rich nation of Nigeria, sending a barrel of light crude up $1.42 to settle at $59.88 on the New York Mercantile Exchange.

Yesterday’s decline was a respite from the week’s run-up, which carried the Dow Jones industrials about 200 points higher to close at a fresh 41/2-year high on Thursday. For the week, the Dow rose 1.8 percent, the S&P; 500 added 1.6 percent and the Nasdaq was higher by 0.91 percent.

Whether stocks can continue moving up is largely pegged on the Fed’s opinion of the economy and inflation, Mr. Koesterich said, adding that he’s monitoring Wall Street’s reaction to lower oil prices and the effect of last month’s unseasonably warm weather.

“Things have been very distorted by how warm the weather was in January,” he said. “We’re trying to get a handle on how it impacted the economy. It helped retail spending and housing starts, but has hurt energy prices.”

More dampening economic news came from the University of Michigan, which said its consumer-sentiment index for February tumbled 3.8 points to 87.4, well below the consensus estimate of 91.

Dell said its fourth-quarter profit surged 52 percent on computer sales to businesses and overseas customers, but a weak first-quarter outlook prompted Banc of America to lower its rating to “neutral” and sent shares sliding $1.58 to $30.38.

Electronics retailer RadioShack Corp. saw its quarterly earnings plunge 62 percent and said it will close between 400 and 700 underperforming stores and two distribution centers in an effort to stage a turnaround. RadioShack dropped $1.67 to $19.08.

KeySpan Corp. confirmed a New York Times report that it has put itself up for sale. The natural-gas utility is seeing bids for more than $6.5 billion, and interest from Consolidated Edison Inc. and London’s National Grid could start a bidding war, according to the Times. KeySpan jumped $4.23 to $40.41.

The market reversed course at midday yesterday, and trading activity slowed toward the end of the session as traders left early for the Presidents Day weekend. U.S. stock markets will be closed on Monday for the holiday.

Overseas, Japan’s Nikkei stock average sank 2.06 percent. Britain’s FTSE 100 gained 0.3 percent, Germany’s DAX index rose 0.11 percent and France’s CAC-40 was higher by 0.54 percent.

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