- The Washington Times - Tuesday, January 31, 2006

NEW YORK (AP) — Disheartened investors bid stocks lower after the Federal Reserve, raising interest rates for the 14th time in nearly two years, failed to give Wall Street a clear signal on when those rate increases would end. A disappointing earnings report from Google Inc. after the close of regular trading raised the likelihood that the losses would continue when trading resumes today.

Google had its first earnings “miss,” with its fourth-quarter results falling below the market’s expectations. Technology stocks dropped in after-hours trading as investors expressed their dismay by selling.

The major indexes were down ahead of the Fed’s decision — the last one under outgoing Chairman Alan Greenspan — and the hint of at least one more rate increase left investors uncertain, although most analysts felt the program of continued, measured rate spikes was at an end.

“The knee-jerk reaction was things aren’t as sure as everybody thought, but when I look at this, this is right in the middle of what my expectations were,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “They left a rate hike in the deck here in case they need it, but that doesn’t mean more of the same.”

The Dow Jones Industrial Average fell 35.06, or 0.32 percent, to 10,864.86.

Broader stock indicators were modestly lower. The Standard & Poor’s 500 index lost 5.12, or 0.4 percent, to 1,280.08, and the Nasdaq Composite Index slipped 0.96, or 0.04 percent, to 2,305.82.

Bonds edged higher on the Fed news, as the yield on the 10-year Treasury note fell to 4.52 percent from 4.53 percent late Monday. The dollar fell against most major currencies, while gold prices rose.

Crude oil futures fell after the Organization of Petroleum Exporting Countries, meeting in Vienna, Austria, decided not to cut oil production. A barrel of light crude settled at $67.92, down 43 cents, in New York.

Other tech shares also dropped in after-hours trading. Yahoo Inc. was off 88 cents at $33.50, while Microsoft Corp. fell 26 cents to $27.89.

Despite continued economic uncertainty, strong corporate earnings helped the major indexes post respectable gains in January. The Dow rose 1.37 percent, the S&P; climbed 2.55 percent and the Nasdaq gained 4.56 percent for the month.

In other economic news, the Conference Board’s Consumer Confidence Index for January came in at a higher-than-expected 106.3, compared with 103.8 in December and better than the 105 reading expected. Although the index rose to its highest level in three years, the news was largely overlooked by investors preoccupied with the Fed.

Mixed earnings from a pair of Dow components weighed on trading. Altria Group Inc. fell $1.57 to $72.34 after missing Wall Street profit forecasts for the quarter by 8 cents per share, despite a 19 percent jump in profits. The company’s 2006 forecast, before one-time charges, was higher than analysts had predicted, however.

Merck & Co. beat analysts’ forecasts by 2 cents per share on the quarter despite flat revenue. The company took a number of one-time charges related to restructuring and legal expenses but said it expects double-digit earnings growth over the next three to five years. Merck rose 4 cents to $34.50.

Fellow drugmaker Sepracor Inc. jumped $8.53, or 18 percent, to $56.91 after it posted a fourth-quarter profit after a year-ago loss. The maker of the sleep drug Lunesta said revenue more than doubled from a year ago.

The Russell 2000 index of smaller companies rose 2.33, or 0.32 percent, to 733.20.

Japan’s Nikkei stock average rose 0.6 percent. In Europe, Britain’s FTSE 100 was down 0.34 percent, France’s CAC-40 gained 0.23 percent, and Germany’s DAX index climbed 0.25 percent.

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