- The Washington Times - Friday, March 16, 2007

NEW YORK (AP) — Wall Street slumped yesterday after another reading on inflation deflated hopes the Federal Reserve will start moving toward an interest rate cut when it meets next week. The indexes suffered moderate losses for the week.

The inflation reading was the second in as many days that upended expectations that the Fed might consider lowering rates as the economy gives off signs of slowing. The sentiment overshadowed a stronger-than-expected increase in industrial production.

“The market is dealing with the softer economic data and trying to reconcile that with the somewhat stiff inflation data,” said Marie Schofield of Columbia Management Group.

The Dow Jones Industrial Average fell 49.27, or 0.41 percent, to 12,110.41. The Standard & Poor’s 500 Index fell 5.33, or 0.38 percent, to 1,386.95, and the Nasdaq Composite Index fell 6.04, or 0.25 percent, to 2,372.66. The Russell 2000 index of smaller companies fell 4.84, or 0.62 percent, to 778.77.

Advancing issues outpaced decliners by about 3 to 2 on the New York Stock Exchange.

For the week, the Dow fell 1.35 percent, the S&P; 500 tumbled 1.13 percent and the Nasdaq fell 0.62 percent. The Russell 2000 fell 0.81 percent.

Bonds showed less movement than might be expected given inflation concerns and instead focused on a slide in stocks. The yield on the benchmark 10-year Treasury note rose to 4.55 percent from 4.54 percent late Thursday.

Joe Balestrino of Federated Investors says investors are viewing economic data through the eyes of the Fed and not for what they say about the economy.

“The fundamentals don’t matter. What ultimately does matter is what the Fed is likely to do,” he said. “It’s an emotional, sentiment-driven market. Anxiety is driving the market.”

The Reuters/University of Michigan consumer sentiment index fell to a six-month low in mid-March.

Hard-hit subprime mortgage lenders rallied yesterday on word that the companies were taking steps to raise capital.

Accredited Home Lenders Holding Co. jumped $1.47, or 15.6 percent, to $11.21 after the subprime mortgage lender announced plans to sell some of its loans at a discount to raise cash necessary to meet margin calls.

Fremont General Corp. rose $1.50, or 20.3 percent, to $8.90 after Credit Suisse boosted the company’s credit line to $1 billion. The company said it received several proposals for additional credit.

Japan’s Nikkei stock average closed down 0.69 percent, Hong Kong’s Hang Seng index fell 0.08 percent and the Shanghai Composite Index fell 0.72 percent. Britain’s FTSE 100 closed down 0.04 percent, Germany’s DAX index slipped 0.09 percent, and France’s CAC-40 fell 0.14 percent.

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