- The Washington Times - Monday, October 2, 2006

NEW YORK (AP) — The Dow Jones Industrial Average toyed with a record high close yesterday before falling 8.72 to 11,670.35. Broader indexes were also lower.

The markets mostly shrugged off the day’s economic data, which presented a mixed picture of the economy. And stocks were helped, at least initially, by falling oil prices. A barrel of light crude settled at $61.03, down $1.88, on the New York Mercantile Exchange. Oil prices have fallen more than 20 percent since July, helping drive gains in stocks in the third quarter.

On Thursday, and again yesterday, the Dow rose above its highest-ever closing level of 11,722.98, reached in January 2000, before retreating. Trading was volatile as some market players were out for the Yom Kippur holiday, and traders said that may have weighed on stocks.

“There are a lot of crosscurrents between earnings, the overall condition of the economy and oil prices,” Jim Herrick, head of equity trading at Robert W. Baird & Co., said of the market’s pullback yesterday.

Despite the Dow’s recent climb to near-record territory, Mr. Herrick said he thinks the markets will stay tethered near current levels as investors wait for more economic data, such as the government’s employment report due Friday, as well as a read on corporate earnings and profit forecasts.

Jon Brorson, head of growth equities at Lehman Brothers Asset Management, points out that the start of a new quarter often brings activity from investors seeking to rebalance their portfolios, though he noted volume was light because of the holiday.

The Institute for Supply Management said the manufacturing sector grew at the slowest pace in more than a year in September amid weaker U.S. auto sales and a cooling of the housing market.

Meanwhile, the Commerce Department said construction spending in August rose 0.3 percent after falling 1 percent in July. Also weighing in, the National Association of Retailers said pending home sales rose 4.3 percent in August.

The Standard & Poor’s 500 Index fell 4.53, or 0.34 percent, to 1,331.59, and the Nasdaq Composite Index slid 20.83, or 0.92 percent, to 2,237.60.

The economic data follow the strongest quarter for the stock market in about a decade. Investors are eager to find out whether the Federal Reserve still sees inflation as a sizable threat. Stocks have risen since the central bank interrupted a two-year string of 17 straight rate increases and last month left rates unchanged for a second straight time.

In corporate news, casino operator Harrah’s Entertainment Inc. received a $15.05 billion offer for the company from private equity firms Apollo Management LP and Texas Pacific Group LLC. The private-equity firms will pay $81 per share, a 22 percent premium to Harrah’s closing stock price on Friday on the New York Stock Exchange. Harrah’s was up $9.25, or 13.92 percent, at $75.68.

Biopharmaceutical concern Myogen Inc. jumped $16.36, or 47 percent, to $51.44 after drug-research company Gilead Sciences Inc. said it would acquire the company for $2.5 billion, a 50 percent premium. As is often the case with the company doing the acquiring in a merger deal, Gilead was down, falling $4.49, or 6.53 percent, to $64.28.

Apple Computer Inc. fell $2.12, or 2.75 percent, to $74.86 after Citigroup cut its rating on the computer maker to “hold” from “buy,” noting that Apple is unlikely to introduce a video IPod with a larger screen and other enhancements before the holidays. The IPods announced last month are likely to constitute the company’s holiday offerings, the analyst contends.

Wal-Mart Stores Inc. fell 88 cents to $48.44, after it reported that September sales at stores open at least a year rose 1.8 percent. The world’s largest retailer had expected such sales, a closely tracked measure of retail performance, would increase 1 percent to 3 percent.

I-Flow Corp. rose $1.22, or 10.15 percent, to $13.24 after announcing it agreed to sell its InfuSystem Inc. subsidiary to HAPC Inc. for $140 million in cash and a secured note. InfuSystem rents infusion pumps and related products to medical oncologists.

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