- The Washington Times - Friday, March 30, 2007

NEW YORK (AP) — Stocks rose, dropped and then recovered yesterday — just as they did over the course of the first quarter, as Wall Street showed nervousness about rising inflation and dollar weakness but took solace in resilient consumer spending and slow economic growth.

The Dow Jones Industrial Average finished the day five points higher, and ended the quarter down 108 points, or 0.87 percent.

Stocks initially climbed yesterday on higher consumer spending and growth in Chicago-area manufacturing, but then plunged after the Bush administration detailed economic sanctions against China to protect American paper producers.

The Commerce Department’s report that core inflation rose in February at the fastest pace since August caused additional wariness. But investors, shoring up their portfolios and picking up bargain stocks, pulled the market up from its lows of the day.

The Dow rose 5.60 points, or 0.05 percent, to 12,354.35, after rising 67 points and falling 106 earlier in the session.

The Standard & Poor’s 500 Index lost 1.67, or 0.12 percent, to 1,420.86, and the Nasdaq Composite Index rose 3.76, or 0.16 percent, to 2,421.64. The Russell 2000 index of smaller companies rose 1.77, or 0.22 percent, to 800.71.

The Commerce Department’s inflation gauge excluding energy and food shot up in February, leaving core inflation rising by 2.4 percent over the past 12 months.

But investors took comfort in other data yesterday, which overall painted a picture of cool economic growth.

A University of Michigan survey showed consumer confidence slipped in March from a month earlier, but the Commerce Department reported that personal spending rose in February by the largest amount in 11 months, a good sign that the economy will keep chugging along, especially since recent data has shown stability in the job market.

An index of Chicago manufacturing activity in March soared more than expected, indicating expansion after a contraction in February. Construction spending in January rose by a better-than-expected 0.3 percent, up from a decline in December as strong gains in nonresidential spending and local projects offset a steep drop in housing construction.

And the government’s spring planting report showed farmers expect to plant 90.5 million acres of corn this spring, more than anticipated.

“Inflation is a worry, so the market is reacting in a tepid way to what I considered fairly good economic news,” said Richard Hoyt of KDV Wealth Management.

The Dow ended the week down 126.66, or 1.01 percent, at 12,354.35. The S&P; 500 fell 15.25, or 1.06 percent, at 1,420.86. The Nasdaq fell 27.29, or 1.11 percent, to 2,421.64. The Russell 2000 index closed the week down 8.17, or 1.00 percent, at 800.71.

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