Newspaper article THE JOURNAL RECORD

Stocks Pull Back as Investors Await Profit, Inflation Reports

Newspaper article THE JOURNAL RECORD

Stocks Pull Back as Investors Await Profit, Inflation Reports

Article excerpt

NEW YORK (AP) -- Blue-chip stocks suffered their worst drop in more than a month Wednesday as profit-taking on the market's recent exploits intensified, muffling enthusiasm over new signs of strength in the semiconductor industry.

The Dow Jones industrial average fell 36.15 to 5,930.62 -- its worst one-day point loss since a nearly 50-point drop on Sept. 5 -- halting a three-day assault on the 6,000-mark. On Monday and Tuesday, the blue-chip average made its first forays past 6,000, but quickly slipped below again.

Broader measures of blue-chip and other large companies also fell sharply, with analysts attributing the selling pressure to another weak day in the bond market and continuing worries over whether upcoming reports on third-quarter earnings will support the market's lofty heights. "The buy side is not going to commit until they have confirmation that the numbers for the quarter are OK," said Joe Battipaglia, chief investment strategist at Gruntal & Co. "That will carry on until we start hearing from Intel, IBM, Microsoft and the big industrials. Once those numbers start coming in, the market will get its footing back and start its assault on 6,000." The technology-dominated Nasdaq market's drop was cushioned by Tuesday evening's report showing a 9 percent rise in new orders of computer chips during September. The increase buoyed the Semiconductor Industry Association's book- to-bill ratio -- a widely watched comparison of the flow of chip orders vs. shipments -- to its highest level since December. Investors also were moving to the sidelines just in case the current tame inflation and interest-rate outlook is thrown off track by any surprises in Friday's and Tuesday's reports on the direction of wholesale and retail prices. Two weeks ago, the Federal Reserve decided not to raise its key lending rates to contain inflation by slowing the economy. Higher inflation can hurt bonds by making their fixed yields less attractive, and higher interest rates can hurt stocks by slowing consumer spending. …

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