Newspaper article THE JOURNAL RECORD

Interest Rate Fears, High-Tech Weakness Undercuts Stocks

Newspaper article THE JOURNAL RECORD

Interest Rate Fears, High-Tech Weakness Undercuts Stocks

Article excerpt

NEW YORK (AP) _ Stocks tumbled Thursday, hurt by weakness in high-technology issues and reports of unexpectedly strong economic activity that resurrected fears of higher interest rates.

The Dow Jones industrial average closed down 38.36 at 3,700.87, having lost as much as 48 points earlier in the session. Traders said several rounds of high-volume computerized selling worsened the blue chip index's losses.

Declining issues outnumbered advancers by about 11 to 5 on the New York Stock Exchange. Big Board volume totaled 285.93 million shares, down from 298.66 million Wednesday.

A sharp drop in computer stocks pushed broad-market indexes lower.

The NYSE's composite index fell 2.37 to 246.04. The Standard Poor's 500-stock index slipped 4.77 to 448.92.

The Nasdaq composite index lost 9.71 to 740.61. The American Stock Exchange's market value index declined 2.67 to 431.19.

Stocks fell in tandem with bond prices after the National Association of Purchasing Management said its index of manufacturing growth rose to 61.2 percent in November from 59.7 percent in the previous month. That was the highest reading since February 1984 and stronger than analysts had expected.

In a further sign of economic strength, the Conference Board's help-wanted advertising index, a barometer of labor demand, jumped to 128 in October from 117 a month earlier.

In separate reports, the Commerce Department said Americans' income surged 1.4 percent in October, and the Labor Department said first-time claims for state unemployment benefits dropped by 12,000 last week.

The data were "considerably stronger than people were anticipating," said Robert Walberg, senior stock analyst at MMS International in Chicago. "They indicate that the economy remains robust, which increases the likelihood that the Federal Reserve will tighten (credit) down the road."

Stock investors worried that higher interest rates will continue to lure investors out of stocks and into fixed-income investments, like bonds. Higher rates could also curb consumer spending and crimp corporate earnings, which would eventually send stock valuations lower, analysts said.

The benchmark 30-year bond fell nearly point earlier in the session and recouped most of those losses, trading down 1-16 point at 8. …

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