Rob
05-17-2006, 01:03 PM
Dow Plunges More Than 145 Pts. on CPI Data
By CHRISTOPHER WANG, AP Business Writer
Wednesday, May 17, 2006, 12:01 PM ET, 35 minutes ago
NEW YORK - Stocks plunged Wednesday after a stronger-than-expected rise in consumer inflation fueled Wall Street's fear that interest rates will keep climbing. The Dow Jones industrial average lost more than 145 points.
Investors were disappointed by a Labor Department report that its consumer price index swelled 0.6 percent in April, ahead of forecasts of a 0.5 percent gain. But core CPI — without food and energy — also grew a faster-than-anticipated 0.3 percent, adding to worries that soaring oil prices have begun to lift prices elsewhere.
The downbeat inflation data overshadowed solid earnings from Hewlett-Packard Co., as well as falling crude oil prices. Wall Street has been anxious about economic news after the Federal Reserve (http://search.news.yahoo.com/search/news/?p=Federal+Reserve) last week said more rate hikes could be necessary to battle inflationary pressures from record commodities prices.
"The CPI data really kicked the market in the teeth today," said Ken Tower, chief market strategist for Schwab's CyberTrader. "So the question now really is where can we find some support?"
With the Dow coming within 75 points of its all-time high of 11,722.98 last week, many analysts felt the market was overbought and would soon see a correction. But Tower said stocks are now oversold after several days of steep losses and suggested that investors may start looking for positive signs in the market.
In late morning trading, the Dow sank 147.36, or 1.29 percent, to 11,272.53, a one-month low.
Broader stock indicators also retreated. The Standard & Poor's 500 index was down 14.40, or 1.11 percent, at 1,277.68, and the Nasdaq composite index fell 28.17, or 1.26 percent, to 2,200.96.
Worries about higher interest rates dragged on bonds, with the yield on the 10-year Treasury note surging to 5.18 percent from 5.1 percent late Tuesday. Recent hopes for mild inflation data helped bond yields pull back from a four-year high of 5.19 percent on Friday.
Crude futures dipped on data showing U.S. gasoline reserves grew for a third week in a row. A barrel of light crude dropped 58 cents to $68.95 on the New York Mercantile Exchange.
Elsewhere, the U.S. dollar continued losing ground to the Japanese yen, and gold prices jumped past $710 an ounce.
HP gave the Dow some support after saying its profit swelled 51 percent last quarter on improved sales. The company also announced plans to consolidate its global data centers in an effort to trim $1 billion of expenses. HP climbed $1.24 to $32.35.
Applied Materials Inc. fell 75 cents to $17.10 despite posting a sharp rise in quarterly earnings, handily beating Wall Street expectations. The chipmaker also forecast results ahead of current estimates.
Xstrata PLC offered to pay $14.5 billion for the remaining 80.2 percent of Canadian mining company Falconbridge Ltd. it doesn't already own, topping Inco Ltd.'s $17.7 billion advance. The $47.19-per-share bid sent Falconbridge shares up $1.81 to $50.59.
Honda Motor Co. plans to build a new U.S. plant — its sixth in North America — as part of $1.18 billion expansion to meet surging demand for its cars. Honda slipped 9 cents to $34.99.
Declining issues led advancers by almost 4 to 1 on the New York Stock Exchange (http://search.news.yahoo.com/search/news/?p=New+York+Stock+Exchange), where volume of 522.8 million shares led the 466.4 million shares changing hands at the same point Tuesday.
The Russell 2000 index of smaller companies dropped 12.26, or 1.66 percent, to 725.21.
Overseas, Japan's Nikkei stock average added 0.92 percent. In afternoon trading, Britain's FTSE 100 lost 2.74 percent, Germany's DAX index sank 2.53 percent and France's CAC-40 was lower by 2.3 percent.
___
On the Net:
New York Stock Exchange: http://www.nyse.com (http://www.nyse.com)
Nasdaq Stock Market: http://www.nasdaq.com (http://us.rd.yahoo.com/dailynews/ap/ap_on_bi_st_ma_re/storytext/wall_street/19067041/SIG=10nde4jh5/*http://www.nasdaq.com)
By CHRISTOPHER WANG, AP Business Writer
Wednesday, May 17, 2006, 12:01 PM ET, 35 minutes ago
NEW YORK - Stocks plunged Wednesday after a stronger-than-expected rise in consumer inflation fueled Wall Street's fear that interest rates will keep climbing. The Dow Jones industrial average lost more than 145 points.
Investors were disappointed by a Labor Department report that its consumer price index swelled 0.6 percent in April, ahead of forecasts of a 0.5 percent gain. But core CPI — without food and energy — also grew a faster-than-anticipated 0.3 percent, adding to worries that soaring oil prices have begun to lift prices elsewhere.
The downbeat inflation data overshadowed solid earnings from Hewlett-Packard Co., as well as falling crude oil prices. Wall Street has been anxious about economic news after the Federal Reserve (http://search.news.yahoo.com/search/news/?p=Federal+Reserve) last week said more rate hikes could be necessary to battle inflationary pressures from record commodities prices.
"The CPI data really kicked the market in the teeth today," said Ken Tower, chief market strategist for Schwab's CyberTrader. "So the question now really is where can we find some support?"
With the Dow coming within 75 points of its all-time high of 11,722.98 last week, many analysts felt the market was overbought and would soon see a correction. But Tower said stocks are now oversold after several days of steep losses and suggested that investors may start looking for positive signs in the market.
In late morning trading, the Dow sank 147.36, or 1.29 percent, to 11,272.53, a one-month low.
Broader stock indicators also retreated. The Standard & Poor's 500 index was down 14.40, or 1.11 percent, at 1,277.68, and the Nasdaq composite index fell 28.17, or 1.26 percent, to 2,200.96.
Worries about higher interest rates dragged on bonds, with the yield on the 10-year Treasury note surging to 5.18 percent from 5.1 percent late Tuesday. Recent hopes for mild inflation data helped bond yields pull back from a four-year high of 5.19 percent on Friday.
Crude futures dipped on data showing U.S. gasoline reserves grew for a third week in a row. A barrel of light crude dropped 58 cents to $68.95 on the New York Mercantile Exchange.
Elsewhere, the U.S. dollar continued losing ground to the Japanese yen, and gold prices jumped past $710 an ounce.
HP gave the Dow some support after saying its profit swelled 51 percent last quarter on improved sales. The company also announced plans to consolidate its global data centers in an effort to trim $1 billion of expenses. HP climbed $1.24 to $32.35.
Applied Materials Inc. fell 75 cents to $17.10 despite posting a sharp rise in quarterly earnings, handily beating Wall Street expectations. The chipmaker also forecast results ahead of current estimates.
Xstrata PLC offered to pay $14.5 billion for the remaining 80.2 percent of Canadian mining company Falconbridge Ltd. it doesn't already own, topping Inco Ltd.'s $17.7 billion advance. The $47.19-per-share bid sent Falconbridge shares up $1.81 to $50.59.
Honda Motor Co. plans to build a new U.S. plant — its sixth in North America — as part of $1.18 billion expansion to meet surging demand for its cars. Honda slipped 9 cents to $34.99.
Declining issues led advancers by almost 4 to 1 on the New York Stock Exchange (http://search.news.yahoo.com/search/news/?p=New+York+Stock+Exchange), where volume of 522.8 million shares led the 466.4 million shares changing hands at the same point Tuesday.
The Russell 2000 index of smaller companies dropped 12.26, or 1.66 percent, to 725.21.
Overseas, Japan's Nikkei stock average added 0.92 percent. In afternoon trading, Britain's FTSE 100 lost 2.74 percent, Germany's DAX index sank 2.53 percent and France's CAC-40 was lower by 2.3 percent.
___
On the Net:
New York Stock Exchange: http://www.nyse.com (http://www.nyse.com)
Nasdaq Stock Market: http://www.nasdaq.com (http://us.rd.yahoo.com/dailynews/ap/ap_on_bi_st_ma_re/storytext/wall_street/19067041/SIG=10nde4jh5/*http://www.nasdaq.com)