Newspaper article THE JOURNAL RECORD

Markets Slip on Economic Data

Newspaper article THE JOURNAL RECORD

Markets Slip on Economic Data

Article excerpt

NEW YORK (AP) -- Stocks sank with bonds Monday as a report showing strong demand for automobiles aggravated worries about inflation.

Trading was light with investors bracing for clearer signals on the economy in this week's key report on May employment and wages.

The Dow Jones industrial average fell 18.47 to 5,624.71 after meandering in a narrow range. The blue-chip barometer, which shed about 120 points last week, was off nearly 37 late in Monday's session.

Declining issues outnumbered advancers by nearly 4-to-3 on the New York Stock Exchange, where volume totaled 314.96 million shares as of 4 p.m., well below Friday's 428.37 million.

Broad-market indexes continued to struggle too, taking their cue from the bond market several times during the day.

The NYSE's composite index fell 0.56 to 358.27 and the Standard & Poor's 500-stock index fell 1.44 to 667.68.

The Nasdaq composite index fell 4.37 to 1,239.06 and the American Stock Exchange's market value index fell 2.22 to 608.71.

Stocks started the day lower with the bond market, where long-term interest rates exceeded 7 percent as traders remained jittery about the recent flurry of mixed economic signals. Many analysts expect the market to remain fairly directionless until Friday's employment data.

The markets have plunged on the strong employment picture depicted in the last three monthly readings. The implied increase in spending power has spurred worries that higher demand would translate into rapid inflation.

Bonds reversed course and long-term rates dipped back below 7 percent after a widely followed survey of purchasing executives indicated that U.S. manufacturing weakened even in May even though the overall economy grew for the fourth straight month.

"The report showed that production wasn't steaming along at a hefty rate. It calmed the fears of those who felt the economy was growing too fast and the inflation consequences severe," said Ned Riley, chief investment officer at Bank of Boston.

But the optimism generated by the purchasing managers report waned after a few hours.

Bonds slid, dragging stocks lower, when Chrysler reported that its car sales rose 20 percent in May and its truck sales rose 16 percent, suggesting strong consumer demand and the potential for higher inflation. …

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