Newspaper article THE JOURNAL RECORD

Stocks End Trading Mixed

Newspaper article THE JOURNAL RECORD

Stocks End Trading Mixed

Article excerpt

NEW YORK (AP) -- Stocks drifted to a mixed finish Thursday after a report of slowing productivity increased fears that the Federal Reserve will raise interest rates by as much as a half-percentage point later this month. Blue chip stocks led the decline.

The Dow Jones Industrial Average was down 67.64 at 10,412.49 and the Nasdaq Composite index was up 12.93 at 3,720.24.

Broader stock indicators were mixed. The Standard & Poor's 500 fell 5.72 to 1,409.38.

Stocks stalled after the Labor Department reported that Americans' productivity, a key measure of future prosperity, rose at an annual rate of 2.4 percent the first three months of this year. That marked a sharp slowdown from the previous quarter, when productivity rose at an extremely sharp 6.9 percent rate.

Economists had expected productivity growth to come in at 3.5 percent. The lower-than-expected number exacerbated fears that the Federal Reserve will raise interest rates by as much as a half- point at its May 16 meeting as it works to keep inflation under control.

"The financial markets may treat this as another reason for the Fed to become more aggressive," said David Orr, chief economist at First Union Securities. Orr said the report confirmed the Fed's worries that productivity is no longer rising fast enough to make up for rising wages and price pressures.

Still, analysts said the productivity report alone would not sway the Fed. Most Wall Street traders opted to wait for the Labor Department's April employment report, due out this morning, before making any big moves Analysts said signs of escalating wage pressures in that report could spark selling, while modest wage growth could enable stocks to close out the week with a rally.

"It's a hesitant market right now," said Larry Wachtel, market analyst at Prudential Securities. "The productivity number was a little worse than expected, but the real problem is that there's just no conviction."

Financial stocks, which are highly sensitive to interest rate changes, recovered some ground after tumbling broadly on Wednesday. …

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