Newspaper article THE JOURNAL RECORD

Stocks Stumble as Rates Jump

Newspaper article THE JOURNAL RECORD

Stocks Stumble as Rates Jump

Article excerpt

NEW YORK (AP) -- Surprisingly strong economic readings Tuesday upset Wall Street's new-found optimism on inflation, sending stocks to steep losses as interest rates jumped in the bond market.

The Dow Jones industrial average fell 57.70 points to 5,647.28, its biggest drop since the market's sharp pullback in mid-July.

The blue-chip barometer's fall was exacerbated by Philip Morris' continuing weakness on tobacco litigation worries, but only four of the Dow's components managed an advance against the session's negative tone.

Broader market measures also retreated and the number of declining issues exceeded those with a gain by a wide margin.

Before stock markets opened, the government reported that consumer prices and retail sales rose more than expected in July, aggravating investors' recently soothed worries about inflation.

The Consumer Price Index, which was being watched closely in advance of the Federal Reserve's Aug. 20 meeting on interest rate policy, rose 0.3 percent, a bit more than many analysts had predicted. And retail sales edged up 0.1 percent, frustrating forecasts of a 0.2 percent decline.

That news was compounded by signs from private research organizations that consumer activity continued at a brisk pace in early August. Many economists have been looking for consumer spending, which can spur inflation with too much demand, to slow during the second half of the year.

"Last week, all the numbers were indicating a slowdown, and these numbers make people wonder," said Henry Herrmann, chief investment officer at Waddell & Reed of Overland Park, Kan. …

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