Posted on: Wednesday, November 17, 2004
Stocks tumble on price report, mediocre profits
By Michael J. Martinez
Associated Press
NEW YORK — A huge jump in wholesale prices sent stocks falling yesterday as investors worried that rising oil prices were starting to take a toll on the overall economy. Mediocre earnings reports from retailers, including Wal-Mart Stores Inc., also pressured the market.
The 1.7 percent increase in the PPI was the largest since January 1990. Without energy and food costs, which vary widely from month to month, "core" wholesale prices climbed in October by 0.3 percent for the second month in a row, the Labor Department reported.
"The PPI really wasn't that surprising. We knew energy prices were up and would start to affect wholesale prices, so that's nothing new," said Brian Belski, market strategist at Piper Jaffray. "Given that we've had a very strong move up in prices over the past few weeks, the fact that we're taking a rest here today isn't a bad thing."
The Dow Jones industrial average fell 62.59, or 0.59 percent, to 10,487.65. Declining issues outnumbered advancers by more than 3 to 2 on the New York Stock Exchange, where preliminary consolidated volume came to 1.77 billion shares, compared with 1.87 billion on Monday.
The Russell 2000 index of smaller companies was down 5.97, or 0.96 percent, at 617.89.
Wall Street was concerned that the sharp increase in the Producer Price Index, which rose 1.7 percent in October after a 0.1 percent hike in September, would either eat into fourth-quarter profits or be passed on to consumers, with the latter possibility spurring inflation as time goes on.
