- The Washington Times - Friday, October 27, 2006

NEW YORK (AP) — Stocks fell today after the Commerce Department reported that the economy grew at the slowest pace in more than three years, stirring concern that a desired soft landing in the economy might prove elusive.

Though investors expected the reading on gross domestic product would show growth to be slowing, the report underscored a notion among some investors that a cooling in the housing market could spill over into other parts of the economy.

The GDP, the broadest measure of the economy, showed growth slowed to 1.6 percent in the third quarter; economists had been expecting a 2.1 percent expansion. The report identified the slowing housing market as a significant drag on growth, as money pumped into home building fell by the largest amount since 1991.

“The fact that there is a moderate pullback tells you that the overall market risk is not extreme,” said Subodh Kumar, chief investment strategist for CIBC World Markets, referring to the strength of the market’s ability to digest the GDP news.

In midafternoon trading, the Dow Jones Industrial Average was down 49.39, or 0.41 percent, at 12,114.27. The Dow has achieved a new high close every day this week and in 13 of the past 18 sessions.

Broader stock indicators were lower. The Standard & Poor’s 500 Index was down 7.62, or 0.55 percent, at 1,381.46, and the Nasdaq Composite Index fell 18.35, or 0.77 percent, at 2,360.75.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.68 percent from 4.72 percent late yesterday. The dollar was mixed against other major currencies, while gold prices rose.

Providing some optimism, the University of Michigan reported that its Consumer Sentiment Index rose to 93.6 for October from a reading of 85.4 last month. Oil prices, which hit lows for the year a week ago and are down sharply from midsummer highs, have left more money in consumers’ wallets.

Light, sweet crude fell 9 cents to $60.27 a barrel on the New York Mercantile Exchange.

Mr. Kumar contended that the markets moved lower today as investors tried to balance expectations about the economy with Federal Reserve policy and oil prices. The central bank yesterday left short-term interest rates unchanged, as expected, and offered a little-changed opinion on the health of the economy.

A flood of corporate earnings has held investor attention in recent weeks. Highest-ever profits from Chevron Corp. provided a dose of good earnings news Friday. Chevron, which was up 86 cents at $68.36, reported its third-quarter profit surged 40 percent to $5.02 billion, handily topping estimates. The year-ago quarter reflected costs tied to Hurricane Katrina.

Microsoft Corp. rose 6 cents to $28.41 and was one of a handful of the 30 stocks that make up the Dow that was advancing Friday. The software company reported better-than-expected results and raised its forecast.

Alltel Corp. fell $3.97, or 6.8 percent, to $54.21 after the wireless carrier’s third-quarter profit, though up 11 percent, came in below expectations.

Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume came to 977.6 million shares compared with 1.18 billion at the same time Thursday.

The Russell 2000 index of smaller companies was down 6.14, or 0.79 percent, at 769.90.

Overseas, Japan’s Nikkei stock average closed down 0.85 percent. Britain’s FTSE 100 closed down 0.39 percent, Germany’s DAX index was down 0.34 percent, and France’s CAC-40 was down 0.69 percent.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide