Blue chips fall in moderate trading

March 21, 2002 at 11:57 AM
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NEW YORK, March 21 (UPI) -- Stock prices on the New York Stock Exchange were lower in moderate trading at midday Thursday, pressured by weakness in General Electric. Prices on the Nasdaq Stock Market inched higher.

The blue-chip Dow Jones industrial average, which lost 133.68 points Wednesday, was down another 75.90 points, or 0.73 percent, to 10,425.60. The tech-heavy Nasdaq composite index, which sank 48.00 points in the previous session, was ahead 2.16 points to 1,835.03.

The broader New York Stock Exchange composite index was down 3.60 to 598.77 while the Standard & Poor's 500 index was down 6.22 to 1,145.63.

The American Stock Exchange composite index was ahead 2.21 points to 899.13 while the Russell 2000 Index was ahead 0.13 to 499.17.

Big Board volume rose to an estimated 510.30 million shares from 498.80 million shares changing hands during the same period Wednesday.

Analysts said blue chips turned lower, led by declines in General Electric along with household appliance, auto, and paper stocks.

Dow component GE shares fell after influential bond fund manager Bill Gross of PIMCO criticized the conglomerate's growing short-term debt and questioned its long-term historical 15 percent annual earnings per share growth rates.

Gross said his funds would not buy any GE commercial paper in the foreseeable future, citing GE Capital's selling $11 billion in medium-term and long-term debt last week, and then disclosing on Monday that it filed for a $50 billion shelf registration with the SEC.

Gross, manager of the world's largest bond fund said GE is disclosing too little to investors.

Meanwhile, on the economic front, reports on consumer prices and weekly jobless claims came in higher than expected, sparking worries about higher interest rates down the road.

The Labor Department said the all-urban Consumer Price Index, the most widely followed gauge of inflation at the retail level, rose 0.2 percent in February after rising the same 0.2 percent in January.

Excluding the often-volatile food and energy sectors, the so-called core CPI rose 0.3 percent after rising 0.2 percent a month earlier.

Most economists on Wall Street were expecting the overall CPI to rise 0.2 percent while the core rate was expected to rise 0.2 percent.

Labor also said new claims for state unemployment benefits during the week ended March 16 fell for the third consecutive week.

The government agency said the number of U.S. workers filing new claims for jobless benefits declined by 12,000 to a seasonally adjusted annual rate 371,000. Economists on Wall Street were expecting first time claims to decline by only 2,000 during the week.

Analysts said the report was more evidence the worst of the job cuts occurred last year and provided more proof the economy is on the mend.

Economists pay particular attention to the jobless claims report, often one of the first signals the economy has reached bottom.

And, the Conference Board said its key measure of future economic activity remained unchanged during February after posting four consecutive increases. The Board said the composite index of leading economic indicators remained at 112.4.

Economists on Wall Street were expecting the gauge of the economy's performance over the next three to six months to rise 0.1 percent during the month after rising 0.8 percent in January and 1.3 percent in December.

Conference Board Economist Ken Goldstein said, "The U.S. economy has quickly turned from recession and is now firmly in recovery. But the road ahead is far from smooth, with sluggish profits and weak export demand restraining growth."

Meanwhile, U.S. Treasury prices lower. The 10-year bond fell 10/32 to 95 21/32. Its yield, which moves in the opposite direction of its price, rose to 5.45 percent from 5.41 percent late Wednesday.

In Europe, stock prices ended slightly lower in moderate trading in London, Frankfurt and Paris, pressured by weakness in insurance and telecom issues. The London International Stock Exchange's blue-chip FTSE-100 index slipped 10.3 points, or 0.20 percent, to 5,256.6. The German DAX index declined 17.98 points, or 0.34 percent, to 5,346.72 and the French CAC-40 index fell 23.90 points, or 0.52 percent, to 4,579.90.

Analysts said stocks were dragged lower by the early declines on the Big Board and weakness in insurance, electrical and telecommunication stocks despite strength in retailers and automakers.

Investors also appeared unmoved by the latest favorable economic news from the United States.

Earlier in Asia, prices on the Hong Kong Stock Exchange closed lower for the third consecutive session, ending at a two-and-a-half week low as concerns spilled over from Wall Street that interest rates may head higher sooner than originally expected. Hong Kong's blue-chip Hang Seng Index fell 206.87 points, or 1.87 percent, to 10,829.73 -- it's lowest close since March 4 when it finished at 10,704.00.

Analysts said property stocks took the brunt of the selling as interest rate fears combined with a poorer-than-expected earnings report from property developer Henderson Land to draw out sellers.

China telecom stocks also contributed to the drop in the market amid lingering worries about a mounting price war in the mainland market.

Elsewhere in Asia, prices on the South Korean Stock Exchange ended fractionally lower, pressured by weakness in chip stocks and bouts of profit taking. The Korea Composite Stock Price Index, or Kospi, eased 1.84 points, or 0.21 percent, to 885.64.

Analysts said selling of Samsung Electronics shares, due to uncertain outlook for DRAM prices, also pressured the market.

Meanwhile, prices ended slightly lower on the Taiwan Stock Exchange as Wednesday's losses on Wall Street held back any heavy buying, although relatively strong volume showed that investor interest remained intact. The Weighted Price Index of the Taiwan Stock Exchange slipped 12.54 points, or 0.21 percent, to 6,046.52.

Elsewhere in the Pacific region, prices ended lower on the Australian Stock Exchange, pressured by concerns over interest rates and weakness in market heavyweights News Corp. and Telstra. The blue-chip All Ordinaries Index lost 27.90 points, or 0.82 percent, to 3,383.90.

Analysts said stocks declined amid speculation the Reserve Bank of Australia would be next to raise interest rates.

Central banks in New Zealand and Sweden hiked rates after the Federal Reserve on Tuesday shifted its policy stance to neutral from one that favored additional monetary easing.

Stocks also were pressured by weakness in the media sector as the government prepared to introduce legislation easing controls on media company ownership.

Meanwhile, Japanese financial markets were closed Thursday for Vernal Equinox Day holiday. Trading will resume on Friday with the blue-chip Nikkei Stock Average hovering around 11,526.78 after falling 266.04 points on Wednesday.

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