Tri-Cities Voice Newspaper - What's Happening - Fremont, Union City, Newark California

September 26, 2006 > Stocks close down amid pessimism about health of economy

Stocks close down amid pessimism about health of economy

by Tim Paradis

NEW YORK (AP), Sep 22 _ Wall Street's growing pessimism about the economy sent stocks down for a second straight day Friday, as investors lost the enthusiasm that followed Wednesday's Federal Reserve decision to leave interest rates unchanged.

The market was caught off guard Thursday by a report from the Federal Reserve Bank of Philadelphia that showed regional manufacturing activity fell to a negative reading for the first time in more than three years. Prior to the manufacturing data, the Dow Jones industrial average had been within 100 points of its January 2000 high of 11,722.98 following the Fed's widely expected decision on short-term interest rates.

``I think the markets are all of a sudden worried about slower growth,'' said Dean Junkans, chief investment officer for Wells Fargo Private Client Services. ``I wouldn't put as much emphasis on one number as the market seems to have done in the last couple days,'' he said, referring to the Philadelphia Fed figure.

Junkans contends the markets have overreacted to the Philadelphia data and were perhaps looking for a reason to pause after posting strong gains in September.

``If you're looking to take some profits that number probably gave you a reason to do that,'' he said.

The Dow closed down 25.13, or 0.22 percent, at 11,508.10, having dropped nearly 80 points Thursday.

Broader stock indicators also fell. The Standard & Poor's 500 index was down 3.25, or 0.25 percent, at 1,314.78 and the Nasdaq composite index fell 18.82, or 0.84 percent, to 2,218.93.

Bonds jumped sharply, with the yield on the benchmark 10-year Treasury note falling to 4.59 percent from 4.64 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.

Oil settled down $1.29 at $60.30 a barrel on the New York Mercantile Exchange after falling earlier in the week following a report showing a jump in U.S. distillate supplies.

The Philly Fed report deflated a market that had surged higher Wednesday, optimistic after the Fed had left rates unchanged. There was already uneasiness in the market about the Fed having possibly slowed the economy too much with its 17 straight increases starting in June 2004, and the Philadelphia report added to investors' disquietude.

The Dow ended the week down 0.46 percent, the S&P 500 index was off 0.39 percent and the Nasdaq fell 0.75 percent.

The market, always anxious to see the latest economic data, will likely be more hypersensitive than usual to next week's reports, particularly the Conference Board's consumer confidence index on Tuesday and the Chicago purchasing managers index, a measure of midwestern manufacturing activity, on Friday.

Mike Malone, a trading analyst at Cowen & Co., contends the market was due for a profit-taking pullback and said investors shouldn't read too much into the Philadelphia Fed number as it is only one figure.

``A lot of the risk such as inflationary fears, high energy prices, concerns about the Fed, etc. are receding and so I think that given the attractive value that's why we've seen the recent move up in the market,'' he said. He added that stocks likely met with some technical resistance this week as the Dow neared its high and the S&P 500 neared a five-and-a-half year high. He doesn't expect such barriers will remain. ``I think that's purely psychological.''

In corporate news, medical device maker Boston Scientific Corp. fell $1.51, or 9.23 percent, to $14.85 after announcing its third-quarter results wouldn't meet Wall Street's expectations.

Tribune Co.'s board, under pressure from shareholders to boost the company's stock, is indicating it would consider selling, breaking up or taking private the company. The owner of the Los Angeles Times and Chicago Tribune, among other properties, said it plans to undertake substantial changes by the end of the year. Tribune rose $1.94, or 6.05 percent, to $33.99.

Palm Inc., the maker of handheld communications devices, said its first-quarter profit fell 9 percent amid increased competition and stock-option expenses. The stock rose 59 cents, or 4.07 percent, to $15.09 as investors were encouraged by the company's growth plan.

The domestic auto industry's troubles continued, as auto-parts supplier BorgWarner Inc. announced plans to cut about 850 jobs, or 13 percent of its North American work force, because of lower auto production. BorgWarner was off 73 cents at $53.76.

Nike Inc. rose $3.90, or 4.73 percent, to $86.36 after the shoe and sportswear maker posted a 9 percent increase in its fiscal first-quarter sales. At the same time, tighter margins and stock-option compensation costs hurt profits.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.3 billion shares, compared with 2.67 billion traded Thursday.

The Russell 2000 index of smaller companies was down 8.50, or 1.17 percent, at 718.63.

Overseas, Japan's Nikkei stock average closed down 1.26 percent. Britain's FTSE 100 closed down 1.26 percent, Germany's DAX index was down 1.32 percent, and France's CAC-40 was down 1.27 percent.

___

The Dow Jones industrials ended the week down 52.67, or 0.46 percent, to finish at 11,508.10. The S&P 500 index fell 5.09, or 0.39 percent, to 1,314.78.

The Nasdaq lost 16.66, or 0.75 percent, to end at 2,218.93.

The Russell 2000 index closed the week down 10.72, or 1.47 percent, at 718.63.

The Dow Jones Wilshire 5000 Composite Index _ a free-float weighted index that measures 5,000 U.S. based companies_ ended the week at 13,137.63 off 75.76 points from last week. A year ago the index was 12,126.92.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

 
About Us   Current Issues   Press Dates   Archived Issues   Ad Rates   Classifieds  
Shopping & Dining Guide   Local Events   Your Comments   Subscribe  
Home

Tri Cities Voice What's Happening - click to return to home page

Copyright© 2005 Tri-City Voice
Advertise in What's Happening - A Guide to the Tri-City Area Return to Tri-City Voice Home Page E-mail the Tri-City Voice About the Tri-City Voice Read a current issue of the Tri-City Voice online Archived Issues of the Tri-City Voice Tri-City Voice Advertising rates Dining and Shopping in the Tri-City Area Events in the Tri-City area Tell us what you think Return to the Tri-City Voice Home Page Subscribe to the Tri-City Voice Press dates/Deadlines