- The Washington Times - Thursday, February 23, 2006

NEW YORK (AP) — Wall Street slid lower yesterday, with inflation concerns and a disappointing earnings report from Viacom Inc. prompting investors to collect profits. A drop in oil prices failed to mitigate the losses.

Investors grew jittery as the latest unemployment figures showed strength in the labor market. First-time jobless claims fell by 20,000 from the previous week to 278,000 — a far sharper drop than economists had expected.

While a strong labor market is generally good news, Wall Street remains concerned that the additional buying power that comes with steady employment could push prices higher and spark inflation, prompting the Federal Reserve to keep raising interest rates.

Still, investors were pleased with a drop in oil prices, which fell below $60 per barrel at one point after the Energy Department reported a rise in crude oil stockpiles. A barrel of light crude settled at $60.54, down 47 cents, on the New York Mercantile Exchange.

“Certainly the move in oil is good, and the market certainly perked up somewhat after that inventory report,” said Peter Cardillo of S.W. Bach & Co. “For the intermediate term, there doesn’t seem to be a supply/demand problem out there. But you don’t know when that’ll change.”

The Dow Jones Industrial Average fell 67.95, or 0.61 percent, to 11,069.22.

Broader stock indicators also fell. The Standard & Poor’s 500 Index lost 4.88, or 0.38 percent, to 1,287.79, and the Nasdaq Composite Index dropped 3.85, or 0.17 percent, to 2,279.32.

The Russell 2000 Index of smaller companies fell 1.08, or 0.15 percent, to 732.45.

Bonds fell, with the yield on the 10-year Treasury note climbing to 4.56 percent from 4.53 percent late Wednesday. The dollar was mixed, while gold prices rose.

Stocks jumped to 41/2-year highs over the past few weeks as strength in the economy encouraged investors. Yet concerns remain, including whether the Federal Reserve’s interest rate increases will cut off economic growth. With little news yesterday to keep momentum alive and uncertainty about the state of the economy later in the year, profit-taking ate into the rally.

“It’s very difficult to extrapolate anything from these short-term moves in the market,” said Christopher Conkey of Evergreen Investments. “Don’t get too excited about days like yesterday, or days like today, either.”

In its first earnings report since spinning off CBS Corp., Viacom said its fourth-quarter profits fell because of poor performance at its Paramount movie studio arm as well as one-time charges related to the company’s reorganization. Viacom fell 96 cents to $41.

Clothing retailer Limited Brands Inc. said Wednesday its fourth-quarter earnings climbed 36 percent on strong sales at its Victoria’s Secret stores and a continuing turnaround at its Express stores. Limited Brands, which beat Wall Street forecasts by 4 cents per share, added 68 cents, or 2.9 percent, to $24.09.

Mortgage broker Fannie Mae jumped $1.23 to $57.14 after investigators implicated former, but not current, executives in its $11 billion accounting scandal.

Japan’s Nikkei stock average surged 1.99 percent, while major European markets declined modestly.

Home builder Toll Brothers Inc. rose $1.05 to $33.54 after the company said fourth-quarter profits jumped 49 percent and that its backlog of building projects rose 22 percent by the end of the quarter. However, the number of new contracts fell 21 percent, raising new concerns about a softening housing market.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide