Investors take profits in advance of new data
NEW YORK » Wall Street retreated yesterday as investors, casting a wary eye toward upcoming economic data, cashed in some profits on the last trading day of April -- the Dow Jones industrial average's best month since 2003.
Economic data yesterday was mixed. Investors were pleased by the U.S. Commerce Department's report that core inflation, as measured by personal consumption spending, was up 2.1 percent for the past 12 months ending in March -- lower than the 2.4 percent rise in the 12 mon- ths ending in February. If inflation eases, the Federal Reserve is more likely to cut interest rates.
But the data also showed personal spending increased only 0.3 percent. That caused some restraint among investors who are concerned about the economy slowing too quickly -- which could eventually hurt corporate profits.
"What the market is always going to ask is, what have you done for me lately?" said Alan Gayle, senior investment strategist at Trusco Capital Management. "The good earnings news has at least to some degree been reflected in stock market prices -- companies are going to have to continue generating these good numbers to see the market go higher."
The Dow fell 58.03, or 0.44 percent, to 13,062.91 after reaching a new trading high of 13,162.06. The Dow on Friday hit its 37th record close for the index since October, and is now up 4.8 percent on the year.
Broader stock indicators fell further yesterday, with investors tending toward larger, more established companies due to signs of a cooling economy.
The Standard & Poor's 500 index fell 11.70, or 0.78 percent, to 1,482.37, while the Nasdaq composite index dropped 32.12, or 1.26 percent, to 2,525.09.
Bonds jumped on the data showing tame inflation and slow growth, which lowered the chance of a rate hike. The yield on the benchmark 10-year Treasury note fell to 4.64 percent from 4.70 percent late Friday.
The Russell 2000 index of smaller companies fell 15.13, or 1.82 percent, to 814.57.
Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange, where volume came to 1.71 billion shares, up from 1.5 billion shares Friday.
Gold prices rose. The dollar recovered slightly from Friday's decline, but still hovered around an all-time low against the euro.
Light, sweet crude fell75 ce- nts to settle at $65.71 per barrel on the New York Mercantile Exchange.
Fueling the end-of-month selloff, the National Association of Purchasing Management-Chicago said its index of manufacturing activity was 52.9 in April, below the average estimate and down from a reading of 61.7 in March -- its highest level in two years. A reading above 50 in the index indicates growth in Midwest manufacturing, while a reading below 50 suggests contraction.
Caution ahead of this week's economic data overshadowed strong earnings data yesterday.
Verizon reported that its first-quarter profit fell 8.4 percent, but revenue rose 17 percent and the results beat predictions. Verizon rose 29 cents to $38.18.
RadioShack Corp. and Wm. Wrigley Jr. Co. also posted strong first-quarter profits. RadioShack rose $1.35, or 4.9 percent, to $29.07, while Wrigley jumped $3.83, or 7 pe- rcent, to $58.88.