Closing Market Report

Star-Bulletin news services

Greenspan comments,
jobs data boost rate fears

NEW YORK >> Stocks slumped yesterday as upbeat labor market data was eclipsed by interest rate worries, lackluster retail sales and a stern warning about the nation's budget deficit from Federal Reserve Chairman Alan Greenspan.

Continuing a now weeks-long pattern, Wall Street fell on good economic news that it believed would motivate the Fed to raise rates. The Labor Department reported that the number of people filing new claims for unemployment insurance fell last week to the lowest level since October 2000, a far greater decline than analysts had anticipated.

The drop added to the market's suspense about the government's monthly jobs report scheduled for release today.

"The unemployment claims are fueling speculation that tomorrow's numbers may be better than expected, so that raises the question about when the Fed will pull the trigger on rates," said Peter Cardillo, chief strategist with S.W. Bach & Co. "So the bears have taken full control."

Declining issues outnumbered advancers about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 1.88 billion shares, compared with 2.05 billion on Wednesday.

The Dow Jones industrial average shed 69.69, or 0.7 percent, to 10,241.26, but was well off the lows of the session.

The broader gauges were also lower. The Nasdaq composite index sank 19.52, or 1 percent, to 1,937.74. The Standard & Poor's 500 index fell 7.54, or 0.7 percent, to 1,113.99. The Russell 2000 index was down 6.97, or 1.2 percent, at 563.09.

The price of the Treasury's 10-year note closed down 732 point, while its yield rose to 4.61 percent from 4.59 percent Wednesday. Two-year Treasury notes fell 332 point and yielded 2.38 percent, up from 2.33 percent Wednesday.

Rising oil prices, apprehension over the U.S. campaign in Iraq and the prospect of higher rates have overshadowed positive economic data and strong corporate earnings.

Consumers' enthusiasm for buying seemed to wane in April as the pace of retail sales cooled following a brisk first-quarter performance. Wal-Mart Stores Inc. lost $1.28 to $54.58 after it reported disappointing results.

Media giant News Corp. fell 88 cents to $36.50, despite reporting advertising gains at its Fox television division and Fox News Channel that helped it post a 69 percent jump in quarterly profits.

Sony Corp. lost $1.01 to $38.07 after the electronics and entertainment giant said it may post a group operating loss for the April-June quarter amid falling prices for the PlayStation 2 game console and promotion costs for the new Spider-man movie.

AT&T Corp. closed down 7 cents at $17.23 after announcing it was re-entering the wireless business just weeks after closing the $41 billion sale of its AT&T Wireless Services Inc. unit to Cingular Wireless.

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