- The Washington Times - Monday, April 30, 2007

NEW YORK (AP) Wall Street retreated yesterday as investors, casting a wary eye toward upcoming economic data, cashed in some profits on the last trading day of April the Dow Jones Industrial Average’s best month since 2003.

Investors did manage to send the Dow to a new trading high before pulling money out of the market ahead of today’s manufacturing data from the Institute for Supply Management. Yesterday, the report’s precursor, the Chicago Purchasing Managers index of manufacturing activity in the Midwest, came in weaker than expected.

The Dow surged 5.7 percent in April, the biggest percentage gain since April 2003, thanks in large part to first-quarter earnings that were stronger than analysts predicted. Quarterly profits released yesterday by companies such as Verizon Communications, Wm. Wrigley Jr. Co., Kellogg Co. and RadioShack Corp. extended that trend.

Economic data yesterday was mixed. Investors were pleased by the Commerce Department’s report that core inflation, as measured by personal consumption spending, was up 2.1 percent for the past 12 months ending in March lower than the 2.4 percent rise in the 12 months ending in February.

But the data also showed personal spending increased only 0.3 percent. That, along with a slim gain in construction spending and the weak reading on Midwest manufacturing, caused some restraint among investors who are concerned about the economy slowing too quickly.

The Dow fell 58.03, or 0.44 percent, to 13,062.91 after reaching a new trading high of 13,162.06. The Dow on Friday hit its 37th record close since October, and is now up 4.8 percent on the year.

Broader stock indicators fell further yesterday, with investors tending toward larger, more established companies because of signs of a cooling economy.

The Standard & Poor’s 500 Index fell 11.70, or 0.78 percent, to 1,482.37, while the Nasdaq Composite Index dropped 32.12, or 1.26 percent, to 2,525.09. The Russell 2000 index of smaller companies fell 15.13, or 1.82 percent, to 814.57.

Bonds jumped. The yield on the benchmark 10-year Treasury note fell to 4.64 percent from 4.70 percent late Friday.

Gold prices rose. The dollar recovered slightly from Friday’s decline, but still hovered around a new low against the euro.

Spurring the end-of-month sell-off, the National Association of Purchasing Management-Chicago said its index of manufacturing activity was 52.9 in April, below the average estimate and down from a reading of 61.7 in March its highest level in two years. A reading above 50 in the index indicates growth in Midwest manufacturing, while a reading below 50 suggests contraction.

Caution ahead of this week’s data ended up overshadowing strong earnings data.

Verizon, one of the 30 Dow stocks, reported that its first-quarter profit fell 8.4 percent, but revenue rose 17 percent and the results beat predictions. Verizon rose 29 cents to $38.18.

RadioShack and Wrigley also posted strong first-quarter profits. RadioShack rose $1.35, or 4.9 percent, to $29.07, while Wrigley jumped $3.83, or 7 percent, to $58.88.

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