Dow is retreating from record highs
NEW YORK » Wall Street extended its decline yesterday, dipping lower after the Labor Department said productivity was flat in the third quarter while wages rose nearly 4 percent. The data touched off concerns that the Federal Reserve will continue to wrestle with inflation, possibly raising interest rates again.
The Dow Jones industrial average posted its first five-day consecutive decline since June 2005 following the economic news and amid mixed reports from retailers on October sales, including Wal-Mart Stores Inc., which had disappointing results last month and warned that November sales would also come in below expectations.
The economic data, which showed wage pressure was increasing at the fastest rate in more than 20 years, rattled investors who have grown concerned that the economy might be cooling too quickly. Wall Street wants a gradual slowdown so the Fed will cut interest rates.
One market observer wasn't worried, noting that the decline was modest. "In the grand scheme of what's happened today and this week I'd say the markets are hanging in there," said Brian Williamson, an equity trader at the Boston Company Asset Management.
The Dow, which fell below the 12,000 benchmark during the session, closed down 12.48, or 0.10 percent, at 12,018.54.
Broader stock indicators also declined modestly. The Standard & Poor's 500 index fell 0.47, or 0.03 percent, to 1,367.34, and the Nasdaq composite index declined 0.33, or 0.01 percent, to 2,334.02.
Light, sweet crude fell 83 cents to $57.88 a barrel on the New York Mercantile Exchange. Oil prices, whose decline had given a boost to stocks during their three-month rally, dropped in recent days but largely failed to prop up investor sentiment in the face of economic news.
Meanwhile, the Labor Department said the number of newly laid off workers seeking unemployment benefits rose last week to its highest level in more than three months.
Investors appeared unfazed by a Commerce Department report that showed factory orders rose a lower-than-expected 2.1 percent in September.
Similarly, the markets showed little reaction to comments by Dallas Federal Reserve President Richard Fisher who said in a speech in New York that while overall inflation remains high it is possible that inflation has peaked and is "finally heading lower." Fisher is a nonvoting member of the Fed's Open Market Committee, which sets short-term interest rates.