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Consumer price growth
edges stocks downward
U.S. stocks fell after a government report showed consumer prices rose more than forecast, heightening concern the Federal Reserve will lift interest rates as soon as next quarter.
Banks such as Citigroup Inc. and J.P. Morgan Chase & Co. led the drop for a second day. The Standard & Poor's 500 Index declined for a fifth day in six.
"Signs of inflation, in some areas, really look a little more serious than people thought in the past," said Gil Knight, a fund manager at Gartmore Global Investments, which oversees $81 billion. "It all points to interest rates moving up quicker than people thought and this is what's got the market upset."
The S&P 500 fell 1.27, or 0.1 percent, to 1128.17. The Dow Jones Industrial Average slipped 3.33 to 10,377.95. The Nasdaq Composite Index shed 5.23, or 0.3 percent, to 2024.85.
More than three stocks dropped for every one that rose on the New York Stock Exchange. Some 1.55 billion shares changed hands on the Big Board, 4.1 percent above the three-month daily average.
Benchmarks bounced between gains and losses throughout the day before turning lower as investors weighed whether a rate increase would wilt optimism for corporate profits.
Prices paid by U.S. consumers in March increased 0.5 percent, boosted by mounting energy, transportation and clothing costs, the Labor Department said. Economists had projected a 0.3 percent gain, based on a Bloomberg News survey.
Yesterday's report that U.S. retail sales had their biggest jump in a year last month piqued concern that the Fed's rate increase will come in the third quarter, sooner than the fourth-quarter boost predicted by economists in a Bloomberg News survey.
"It's weighing on people's minds," said Peter Maher, who helps manage $1 billion at Bryn Mawr Trust Wealth Management in Bryn Mawr, Penn. "If the bond market is telling us anything, we are going to see" a rate increase this year, he said.
The yield on the benchmark 10-year Treasury note climbed 1 basis point, to 4.36 percent. It earlier reached 4.47 percent, the highest since Nov. 10.
Higher interest rates reduce the value of bonds owned by banks, brokers and insurers, and also crimp demand for mortgages and loans. They make dividend-paying stocks less attractive to investors who seek income.
Citigroup, the world's biggest financial-services company, lost 25 cents to $50.95. J.P. Morgan shed 77 cents to $39.27. Countrywide Financial Corp. dropped $1.84 to $55.45.
Better-than-forecast profits limited the market's decline.
"In the end, earnings are going to hold the day," said Allan Meyers, who manages more than $1 billion for Fifth Third Bank in Grand Rapids, Mich. "As companies come out and meet or exceed expectations, the market's going to go higher. We've got a little bit of fear for higher interest rates because we've seen some relatively good economic numbers. But I don't see the Fed raising rates within the next month."
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