NEW YORK, May 10 (UPI) -- Stock prices on the New York Stock Exchange and the Nasdaq Stock Market were lower in light trading at midday Friday as investors brushed aside a report showing inflation at the wholesale level remained under control and shifted their attention on corporate news.
The blue-chip Dow Jones industrial average, which lost 104.41 points Thursday, was down 18.60 points to 10,018.80. The tech-heavy Nasdaq composite index, which fell 45.80 points in the previous session, was down 22.24 points to 1,628.25.
The broader New York Stock Exchange composite index was down 2.95 to 569.77 while the Standard & Poor's 500 index was down 7.28 to 1,065.73.
The American Stock Exchange composite index was down 6.00 points to 948.69 while the Wilshire 5000 Index was down 57.45 to 10,123.39.
Big Board volume declined to an estimated 445.60 million shares from 494.10 million shares changing hands during the same period Thursday.
Analysts said stocks fall on fears technology issues will remain sluggish after the Wall Street Journal reported International Business Machines plans to cut as many as 8,000 employees, or 2.5 percent of its worldwide staff, as the leading computer maker battles a slump in technology spending.
The Journal, citing a person familiar with the situation, said the world largest computer maker could make the lay-offs from among its 318,000 employees during the current quarter.
Analysts said the report suggested that corporate America is not betting on an uptick in spending for their products quite yet.
Analysts said stocks were also pressured by a report in BusinessWeek that Boeing Co. used accounting loopholes to hide production problems and looming losses in 1997.
Boeing denied any cover-up and said the production problems were well known at the time.
Experts said stocks also were pressured after ratings agencies slashed $32 billion in WorldCom Inc. debt to junk status late Thursday, citing the long-distance telephone company's deteriorating operating performance, enormous debt load, and expectations of further weakness.
In the face of the downgrade, WorldCom executives sought to reassure investors by saying the company was in talks with banks on new financing and could cut another $1 billion in planned investment and sell assets to shore up its balance sheet.
Moody's Investors Service cut WorldCom's senior unsecured debt rating three notches, to Ba2, its second highest junk grade, from Baa2, and its short-term debt rating two notches, to not-prime from prime-2. Moody's also warned it may cut the long-term rating again.
The downgrade will drive up the long-distance phone company's borrowing costs, and could force some investors to sell its debt because they cannot own junk-rated debt.
Following Moody's downgrade Fitch Ratings cut WorldCom's senior unsecured debt rating to BB, a junk grade, from BBB-Minus, its lowest investment grade.
Standard & Poor's threatened on April 30 to cut WorldCom's A-3 short-term credit rating, its lowest investment grade, and said it may cut the company's BBB long-term credit rating, its second lowest investment grade.
Meanwhile, on the economic front, the Labor Department said inflation at the wholesale level fell in April as the cost of food declined 3.2 percent -- its fastest pace in 28 years.
The government agency said the Producer Price Index, a key measure of inflation at the wholesale level, fell 0.2 percent in April after posting its largest increase in 14 months during the previous month.
Most economists on Wall Street were expecting the PPI to rise 0.4 percent after climbing 1.0 percent in March.
Excluding the often-volatile food and energy sectors, the so-called core PPI inched up 0.1 percent after rising the same 0.1 percent in March.
Most economists on Wall Street were expecting the core rate to rise 0.1 percent.
And, Federal Reserve Chairman Alan Greenspan told fellow regulators that international negotiators continue to fine-tune a complicated set of risk-based capital rules "in ways that promise to damp cyclical swings in capital requirements."
Greenspan, speaking before the Chicago Federal Reserve's 38th Annual Conference on Bank Structure and Competition, urged the group to promote regulations that don't unintentionally produce market swings.
"Our emphasis today is the need to be sensitive to the market and cyclical implications of the regulations we adopt," he said.
While some critics argue that the Federal Reserve's dual roles in deciding monetary policy and regulating banks should be separated, Greenspan said central banks need to remain in the bank regulatory business.
"Financial markets and intermediaries are part of the macroeconomic cyclical process, and thus new rules involving these markets and institutions need to be evaluated in that context," Greenspan said, justifying the Fed's role as regulator.
He said that government programs, such as deposit insurance and access to the discount window, impact the markets in ways beyond providing the stability necessary to prevent runs on deposits seen during the Great Depression.
"It induces intermediaries to take on more risk with less capital, creating what is arguably the largest problem facing modern bank supervisors -- wide swings in credit quality," he said.
Meanwhile, U.S. Treasury prices drifted lower. The 10-year bond eased 7/32 to 97 19/32. Its yield, which moves in the opposite direction of its price, rose to 5.19 percent from 5.16 percent late Thursday.
In Europe, stock prices ended lower in light trading in London, Frankfurt and Paris, but settled above their worst levels. The London International Stock Exchange's blue-chip FTSE-100 index lost 22.6 points, or 0.43 percent, to 5,175.0. The German DAX index fell 66.93 points, or 1.35 percent, to 4,899.55 and the French CAC-40 index fell 57.02 points, or 1.30 percent, to 4,329.84.
Analysts said stocks came off their worst levels following the surprise decline in the U.S. producer price index, which eased fears of rate hikes and ignited hopes that if rates were held for a prolonged period at their current low levels, they will help fuel the much hoped for rebound in corporate profitability.
Analysts noted investors in London brushed aside a report showing Britain's trade deficit widened in March as imports increased.
Meanwhile, investors in Germany brushed aside a new survey showing German retail confidence fell to its lowest level ever in April, while there was also little reaction to a report that the German trade surplus widened in March.
Earlier in Asia, prices on the Tokyo Stock Exchange ended lower in mostly range bound trading, pressured by profit taking following two days of gains. Japan's blue-chip Nikkei Stock Average of 225 selective issues, which rose 112.55 points Thursday, gave back 102.19 points, or 0.9 percent, to 11,531.11. The key index had risen 317 points over the past two sessions.
Analysts said stocks lost ground on profit taking as investors were once again left with few buy incentives.
While the downside was well supported, many players said it is hard to find domestic buying factors.
Trading activity was limited to dealers trading on their own accounts and individuals locking in profits, traders said. Most institutional and foreign investors took a wait-and-see approach due to uncertainty in both the U.S. market and the direction of dollar-yen.
Elsewhere in Asia, prices on the Hong Kong Stock Exchange ended slightly lower in range bound trading as investors turned cautious following Thursday's slide on Wall Street. The blue chip Hang Seng Index lost 54.86 points, or 0.47 percent, to 11,645.90 after trading in a tight range between 11,630.04 and 11,752.96.
Meanwhile, prices ended lower on the South Korean Stock Exchange, pressured by weakness in the auto sector. The Kospi Composite Index fell 20.74 points, or 2.47 percent, to 817.93.
Prices ended higher on the Taiwan Stock Exchange, lifted by strength in semiconductor issues. The Weighted Index rose 68.02 points, or 1.19 percent, to 5,807.30.
Elsewhere in the Pacific region, prices ended slightly lower on the Australian Stock Exchange, pressured by Thursday's declines on Wall Street. The blue-chip All Ordinaries Index slipped 6.40 points, or 0.19 percent, to 3,279.10.
