- The Washington Times - Thursday, March 9, 2006

NEW YORK (AP) — Wall Street surrendered early gains and closed lower yesterday as a higher U.S. trade deficit and questions about the labor market squelched enthusiasm over a policy change at the Bank of Japan.

The market was cheered after the Japanese central bank signaled an end to its current interest-rate policy, put in place five years ago to fight inflation and also lift a sagging economy. The new policy, focusing less on rising prices and more on Japan’s growing economic strength, encouraged investors worried about the Federal Reserve’s stance on interest rates and inflation.

However, the session’s gains slipped away as investors focused on increasing unemployment claims, which climbed above the 300,000 mark for the first time in eight weeks. A new record trade gap also darkened the mood.

The Dow Jones Industrial Average fell 33.46, or 0.3 percent, to 10,972.28.

The Standard & Poor’s 500 Index lost 6.24, or 0.49 percent, to 1,272.23, and the Nasdaq Composite Index dropped 17.74, or 0.78 percent, to 2,249.72.

The Russell 2000 Index of smaller companies fell 3.56, or 0.49 percent, to 718.28.

In the bond market, prices moderated as the yields on long-term Treasuries began to outpace shorter-term notes. The yield on the 10-year Treasury note was steady at 4.73 percent from late Wednesday. The dollar was mixed, while gold rose.

Crude-oil moved higher, but remain more than $2 per barrel lower from last Friday’s trading. A barrel of light crude settled at $60.47, up 45 cents, on the New York Mercantile Exchange.

Investors were somewhat uneasy as they awaited the monthly job-creation report, due today. The state of the labor market could give Wall Street insight into wage inflation — a key component of the Fed’s interest-rate policy.

“The market is preparing for a good bounce in employment,” said Michael Strauss, chief economist of Commonfund. “But what that means is more concern about inflation as demand increases.”

Dow industrial General Motors added 92 cents to $21.34 on a report that GM and bankrupt parts maker Delphi are close to a cost-cutting labor agreement that would avoid a possible strike at Delphi that could cripple GM’s production. The United Auto Workers strongly disputed the report, however.

Google Inc. said it will pay up to $90 million to settle a lawsuit that claimed the company overcharged advertising customers for Internet sales referrals, a “click-fraud” that involved Google’s ad service users clicking on other companies’ ads simply to drive up their own revenue. Google fell $10.88 to $343.

The NYSE Group Inc. dropped $3.90, or 4.9 percent, to $76.10 in its second day of trading on the New York Stock Exchange as investors took profits after its 25 percent gain from the previous session.

Japan’s Nikkei stock average surged 2.62 percent on the Japan central bank’s move. Britain’s FTSE 100 was up 0.74 percent, France’s CAC-40 rose 0.77 percent, and Germany’s DAX Index gained 1.04 percent.

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